Miners, weak earnings drag European stocks lower
European stocks retreated from six-week highs on Thursday, with miners leading the declines on renewed concerns about China's property sector, while mixed quarterly updates from companies dampened risk appetite.
The Europe-wide STOXX 600 index (.STOXX) fell 0.2% due to a dour mood in global markets following the collapse of a $2.6 billion asset sale at indebted developer China Evergrande Group. read more
European miners (.SXPP), which have a large exposure to China (.SXPP), shed 2.5%. UK-listed shares of Anglo American (AAL.L) fell 3.7% even though it reported a 2% rise in overall production in the third quarter.
Worries about China's plan to bring down coal prices hit high-flying metal prices on Wednesday. read more
"China's macro cycle has troughed, but growth remains subdued," said Andreas Bruckner, Bank of America's European equity strategist, who earlier this month set a year-end target of 420 for the STOXX 600, implying a fall of about 10% from current levels.
"The downside risks relative to our projections are increasing, given the potential additional drag from supply-chain disruptions, energy shortages in Europe and China, the intensifying debt crisis in China's property sector, and the risk of a central bank policy mistake."
Swiss engineering and tech group ABB (ABBN.S) tumbled nearly 6% after it lowered its full-year sales forecast and warned of shortages of components, while Sweden's AB Volvo (VOLVb.ST) fell about 0.8% after it said chip shortages hampered production of its trucks. read more
There was no relief for banking stocks (.SX7P) either. The sector fell 0.9% even though UK's Barclays (BARC.L) and Finland's Nordea reported upbeat quarterly results. read more
Defensive sectors lent support to European bourses as personal and household goods index (.SXQP) rose 0.7% on the back of Unilever's (ULVR.L) third-quarter earnings beat. read more
Luxury stocks were also higher after Birkin bag maker Hermes (HRMS.PA) rose 0.8% on strong quarterly sales. read more
Cartier-owner Richemont (CFR.S) advanced 0.4% after HSBC (HSBA.L) raised the brand to "buy" from "hold", citing its leadership and momentum in the jewellery industry.
(Source: Reuters)
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