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July 1, 2010, 8:49 p.m. EDT

Europe stocks slide to start quarter

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By Michele Maatouks And Sarah Turner

European stocks started the third quarter in a slide, as weak Chinese and U.S. economic data underlined doubts about the global economic recovery.

The euro rose against the dollar, but oil and gold prices fell.

Weaker-than-expected Chinese manufacturing data was the catalyst for a downturn in equities. China's purchasing managers index fell to 52.1 in June from 53.9 in May, marking the second straight month of slower growth.

Basic resources took the brunt of the selling as base metals prices declined. ArcelorMittal /zigman2/quotes/202790215/composite MT +1.83% fell 2.9% in Paris and Randgold Resources /zigman2/quotes/201432642/composite GOLD -0.10% declined 5.4% in London as the Stoxx 600 Europe basic-resources index fell 3.7%.

The pan-European Stoxx 600 index fell 2.5% to 237.30. France's CAC-40 index lost 3% to 3339.90, Germany's DAX fell 1.8% to 5857.43 and the U.K.'s FTSE 100 index slid 2.3% to 4805.75, a 2010 closing low.

While there were a few bright spots in the day's news, they were overshadowed by a raft of disappointing data out of the U.S., which pushed European stocks further into the red in the afternoon session. Jobless claims, manufacturing ISM and pending home sales all fell short of expectations.

Another report showed the number of workers filling new claims for unemployment benefits rose by 13,000 last week, versus expectations for a 2,000 decline, while the ISM index fell to 56 and pending home sales in May plunged 30%.

The reports pushed U.S. stocks lower. In 4 p.m. trading, the Dow Jones Industrial Average fell 41.49 points, or 0.4%, to 9732.53. Prices of Treasurys rose, sending the 10-year and 30-year yields to their lowest since April 2009. Bond yields move inversely to prices.

The 10-year note rose 7/32 to 104 27/32, to yield 2.931%, and the 30-year bond rose 24/32 to 108 5/32, for a yield of 3.869%.

The economic weakness more than offset any hint of optimism brought about by a well-received Spanish bond auction and a generous European Central Bank allotment of €112 billion ($137 billion) in six-day loans.

Meanwhile, in the money market, the cost of borrowing euros in the interbank market surged, as banks repaid a hefty €442 billion one-year loan to the European Central Bank. Data from the British Bankers' Association showed the three-month euro London Interbank Offered Rate, or Libor, rose to 0.71750% from Wednesday's 0.70625%, its highest level since Sept. 21, 2009.

Reports due Friday include the euro-zone producer-price index and unemployment rate. But the main focus will be on the U.S. nonfarm payrolls report. U.S. factory orders are also on the schedule.

In the currency markets, the euro got a boost from the successful Spanish bond auction. Late afternoon Wednesday in New York, the common currency was at $1.2492 from $1.2229 late Wednesday and sterling was at $1.5145 from $1.4939. The dollar was at 87.48 yen from 88.39 yen and at 1.0618 Swiss francs from 1.0777 francs.

Light, sweet crude for August delivery fell $2.68, or 3.5%, to $72.95 a barrel on the New York Mercantile Exchange. Gold for July delivery slid $39.20, or 3.2%, to $1,206.30 per troy ounce on the Comex division of Nymex.

In major market action: Auto makers were among the losers as French new-car registrations fell 1.2% in June. Renault /zigman2/quotes/200919924/delayed FR:RNO +2.56% fell 4% and Peugeot tumbled 4.6%, while luxury-car maker BMW fell 4.7% and rival Daimler lost 3.6%.

Deal speculation drove some stock activity. Chloride Group fell 4.1% to 370 pence after Swedish-Swiss engineering giant ABB /zigman2/quotes/209404356/composite ABB +2.04% said it wouldn't match a nearly £1 billion pound ($1.49 billion) offer by Emerson Electric /zigman2/quotes/200181610/composite EMR +2.00% to buy the British power-systems specialist. The Emerson bid is valued at 375 pence a share. ABB shares fell 2%.

Shares of sugar producer Tate & Lyle /zigman2/quotes/205109332/delayed UK:TATE 0.00% rose 1% after it announced it would sell its EU Sugar Refining operations to American Sugar Refining—better known as Domino Sugar—for £211 million.

BP /zigman2/quotes/207305210/composite BP +1.81% shares also bucked the downward trend, rising 2.8%. The latest report from the oil giant suggests the first relief well to stem the Gulf oil spill may be completed earlier than forecast.

Neelabh Chaturvedi contributed to this article.

/zigman2/quotes/202790215/composite
US : U.S.: NYSE
$ 28.90
+0.52 +1.83%
Volume: 1.15M
May 17, 2022 10:57a
P/E Ratio
1.83
Dividend Yield
2.00%
Market Cap
$24.46 billion
Rev. per Employee
$520,642
loading...
/zigman2/quotes/201432642/composite
US : U.S.: NYSE
$ 20.50
-0.02 -0.10%
Volume: 3.83M
May 17, 2022 10:57a
P/E Ratio
18.91
Dividend Yield
1.96%
Market Cap
$36.33 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/200919924/delayed
FR : France: Euronext Paris
24.20
+0.61 +2.56%
Volume: 1.29M
May 17, 2022 4:42p
P/E Ratio
7.74
Dividend Yield
0.00%
Market Cap
€6.83 billion
Rev. per Employee
€295,355
loading...
/zigman2/quotes/209404356/composite
US : U.S.: NYSE
$ 29.02
+0.58 +2.04%
Volume: 759,797
May 17, 2022 10:57a
P/E Ratio
12.46
Dividend Yield
2.40%
Market Cap
$54.36 billion
Rev. per Employee
$275,590
loading...
/zigman2/quotes/200181610/composite
US : U.S.: NYSE
$ 86.14
+1.69 +2.00%
Volume: 869,808
May 17, 2022 10:57a
P/E Ratio
17.97
Dividend Yield
2.40%
Market Cap
$50.16 billion
Rev. per Employee
$218,062
loading...
/zigman2/quotes/205109332/delayed
UK : U.K.: London
779.00 p
0.00 0.00%
Volume: 413,894
May 17, 2022 3:42p
P/E Ratio
14.13
Dividend Yield
4.64%
Market Cap
£3.10 billion
Rev. per Employee
£467,012
loading...
/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 31.58
+0.56 +1.81%
Volume: 2.88M
May 17, 2022 10:57a
P/E Ratio
N/A
Dividend Yield
4.09%
Market Cap
$99.12 billion
Rev. per Employee
$2.62M
loading...

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