Eurostoxx 50:2,794.26 (–59.72) Frankfurt DAX:7,132.15 (–134.67) Paris CAC:3,906.98 (–83.87)
EUROPEAN shares hit a five-week closing low yesterday as a cut in credit ratings for Greece and a “negative” outlook for Italy raised concerns about the euro zone’s continuing debt crisis.
Charts sent a near-term bearish signal and the Eurostoxx 50 volatility index jumped 11 per cent to a two-month high, indicating a fall in investors’ appetite for equities. However a fund manager said longer-term market outlook stayed positive.
The FTSEurofirst 300 index of top European shares finished 1.7 per cent weaker at 1,116.52, the lowest close since mid-April. Autos, banks and commodities were among the top losers.
Sentiment also worsened following dismal data showing the global economic recovery remained fragile, and as a setback seen by Spain’s ruling Socialists in regional and municipal elections put more pressure on the government, which is fighting to avoid having to seek a bailout.
“There is just very little reason to buy this market. People are using these aspects as an excuse for a selloff. It’s going to be a very volatile summer and we think that we have already seen the highs at least over the next few months,” an equity trader in London said, referring to the euro debt crisis.
Italy’s FTSE MIB fell 3.3 per cent and Greek shares dropped 1.3 per cent.
Automobile shares featured among the biggest losers, with the Stoxx Europe 600 sector index falling 2.9 per cent, on concerns about global demand for vehicles on disappointing macroeconomic data. Figures for the second quarter showed marginally slower economic growth in the euro zone and China.
However, Peter Braendle, European equities specialist at Swisscanto Asset Management, which manages 60 billion Swiss francs, said he was fairly positive regarding European equities in the longer term.
The Stoxx Europe 600 banking sector index fell 2 per cent. France’s Credit Agricole, one of the most exposed banks to Greece, dropped 3 per cent. Commerzbank fell 5 per cent on announcement of a larger-than-expected discount on a sale of new shares.
The airline sector also came under pressure following an eruption by Iceland’s most active volcano. Air France and EasyJet fell 4.5 to 5.4 per cent. – (Reuters)
