Date: 2010-07-06
European shares fall to 6-week closing low
LONDON - European shares fell to their lowest close in nearly six weeks on Monday, with miners weaker on a gloomier economic outlook and volumes thin as Wall Street was closed for the Independence Day holiday.
A rise for BP helped stem losses for major indexes.
The pan-European FTS Euro first 300 index of top shares fell 0.3 percent to 966.52 points, the lowest close since May 25. Volume was less than half the 90-day average.
The index lost 4.3 percent last week, weighed down by persistent worries over the pace of global economic recovery, and is down more than 13 percent from a mid-April peak.
Worries of a double-dip recession returned to the fore following a week of disappointing macroeconomic data, including evidence of a downbeat U.S. labor market and a slowdown in Chinese manufacturing.
Growth in the services sector in China, Britain and the euro zone also slipped in June, data showed, supporting the view that emerging and developed economies are set to cool off through the second half of the year.
Mining stocks to suffer included Anglo American BHP Billiton and Rio Tinto down between 1.8 and 2.2 percent.
But some strategists say the recent sell-off has been overdone.
"You will see over the next two weeks, some strong corporate earnings numbers, and we should have some spectacularly good economic data from Germany and France, partly because of the weak euro," said Bob Parker, vice chairman of asset management at Credit Suisse.
"Markets were focusing on bad news in the last week. My own view is that the chances of a major reversal in China are very low indeed. Yes, it's slowing but to 9 percent growth, from 12 percent growth."
BP rose 3.5 percent on optimism that the plugging of the leaking well in the Gulf of Mexico is now only about a month away. Reports said BP was seeking a strategic investor to secure its independence, though some major shareholders were skeptical and said this was unlikely.
Across Europe, the FTSE 100 , Germany's DAX and France's CAC 40 fell between 0.3 and 0.5 percent. The Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU fell 0.5 percent.
The heavyweight banking sector was lower, with Barclays BNP Paribas and Banco Santander down between 0.9 and 2.9 percent, as some caution prevailed ahead of the outcome of the stress test on European banks.
French Economy Minister Christine Lagarde said on Sunday the stress-test results, to be published on July 23, will show banks in Europe are solid and healthy.
While some analysts have said the stress tests should restore confidence in the sector and lead to a recapitalization of weaker banks, others have said the exact criteria of the sovereign stress needs to be disclosed if the tests are to convince the market.
Among individual shares, Spanish infrastructure operator Abertis rose 12.1 percent, and was suspended, after a report that its largest shareholders were studying a bid for the remainder of the company.
Investors kept a close eye on charts after Wall Street's S&P 500's 50-day moving average on Friday broke below its 200-day moving average, a move known as the "death cross" and which could point to more selling pressure ahead.
The next key support level for the euro zone blue-chip index Euro STOXX 50, is 2,448.10, the index's lowest point in 2010, touched in late May. It fell 0.6 percent to 2,507.83 on Monday.
But Credit Suisse's Parker said: "Equity markets could go 10 percent higher by year-end, from these distressed levels."
European shares fall to 6-week closing low
LONDON - European shares fell to their lowest close in nearly six weeks on Monday, with miners weaker on a gloomier economic outlook and volumes thin as Wall Street was closed for the Independence Day holiday.
A rise for BP helped stem losses for major indexes.
The pan-European FTS Euro first 300 index of top shares fell 0.3 percent to 966.52 points, the lowest close since May 25. Volume was less than half the 90-day average.
The index lost 4.3 percent last week, weighed down by persistent worries over the pace of global economic recovery, and is down more than 13 percent from a mid-April peak.
Worries of a double-dip recession returned to the fore following a week of disappointing macroeconomic data, including evidence of a downbeat U.S. labor market and a slowdown in Chinese manufacturing.
Growth in the services sector in China, Britain and the euro zone also slipped in June, data showed, supporting the view that emerging and developed economies are set to cool off through the second half of the year.
Mining stocks to suffer included Anglo American BHP Billiton and Rio Tinto down between 1.8 and 2.2 percent.
But some strategists say the recent sell-off has been overdone.
"You will see over the next two weeks, some strong corporate earnings numbers, and we should have some spectacularly good economic data from Germany and France, partly because of the weak euro," said Bob Parker, vice chairman of asset management at Credit Suisse.
"Markets were focusing on bad news in the last week. My own view is that the chances of a major reversal in China are very low indeed. Yes, it's slowing but to 9 percent growth, from 12 percent growth."
BP rose 3.5 percent on optimism that the plugging of the leaking well in the Gulf of Mexico is now only about a month away. Reports said BP was seeking a strategic investor to secure its independence, though some major shareholders were skeptical and said this was unlikely.
Across Europe, the FTSE 100 , Germany's DAX and France's CAC 40 fell between 0.3 and 0.5 percent. The Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU fell 0.5 percent.
The heavyweight banking sector was lower, with Barclays BNP Paribas and Banco Santander down between 0.9 and 2.9 percent, as some caution prevailed ahead of the outcome of the stress test on European banks.
French Economy Minister Christine Lagarde said on Sunday the stress-test results, to be published on July 23, will show banks in Europe are solid and healthy.
While some analysts have said the stress tests should restore confidence in the sector and lead to a recapitalization of weaker banks, others have said the exact criteria of the sovereign stress needs to be disclosed if the tests are to convince the market.
Among individual shares, Spanish infrastructure operator Abertis rose 12.1 percent, and was suspended, after a report that its largest shareholders were studying a bid for the remainder of the company.
Investors kept a close eye on charts after Wall Street's S&P 500's 50-day moving average on Friday broke below its 200-day moving average, a move known as the "death cross" and which could point to more selling pressure ahead.
The next key support level for the euro zone blue-chip index Euro STOXX 50, is 2,448.10, the index's lowest point in 2010, touched in late May. It fell 0.6 percent to 2,507.83 on Monday.
But Credit Suisse's Parker said: "Equity markets could go 10 percent higher by year-end, from these distressed levels."