European shares were lower this afternoon, hit by growth worries and led by German stocks as weak Chinese export growth hit carmakers, while slower euro zone PMI data dimmed hopes of a positive US manufacturing number.
The chance of a sustained recovery in China's manufacturing sector fell after new export orders slipped in August, partly due to the sovereign debt problems in developed countries adding to worries about global growth.
The euro zone manufacturing sector also showed signs of weakness as it contracted for the first time in almost two years and in a worrying sign German activity which have supported growth in the region slowed.
Ireland's manufacturing sector declined marginally, but with the fragile recovery in the sector so reliant on exports, experts warned that there could be an adverse impact from a global slowdown.
The German market, which relies heavily on China to export, was down 1.8 per cent, underperforming the other major European exchanges on the worries about a slowdown in global growth.
Carmakers were amongst the hardest hit, with Daimler's down 2.9 per cent and featuring on the German DAX's worst performers list.
German group Porsche, which also relies on China for sales, was 3.8 per cent lower and a standout loser in the STOXX Europe 600 Automobiles & Parts index , down 2.4 per cent.
The carmaking sector has fallen 28 percent since the sell-off began in July fuelled by recession fears after weak economic data, a sovereign credit downgrade in the United States and contagion worries in the euro zone peripheral debt crisis.
"Investors are selling down cyclical names geared to economic activity and Germany is underperforming as it is the most susceptible to that," said Ian King, head of international equities at Legal & General.
Fiat, down 4.2 per cent, was hit by a broker downgrade as Citigroup cut its rating to "hold" from "buy" to place it also amongst the bottom performers.
Miners, also correlated to economic growth, were big movers on the downside, with the STOXX Europe 600 Basic Resources index down 1.8 per cent, taking its slide from July to 21 per cent.
The pan-European FTSEurofirst 300 index of top shares was down 0.5 per cent at 962.52 points by 12.26pm, having been as low as 958.37, after a three-day rally.
The index briefly dipped to a session low as worries about the euro zone peripheral debt crisis grew following news of sluggish demand at the first Spanish bond auction since the European Central Bank started buying the country's debt.
The euro zone's blue chip Euro STOXX 50 index fell 1.1 per cent to 2,277.80 having earlier tested a support level - the 23.6 per cent Fibonacci retracement level or 2,268.28 from its sell-off which began in July. Next resistance was seen at the 38.2 per cent Fibonacci retracement level or 2,386.57.
The Irish index of shares was slightly higher this afternoon, at 2580.57. Bank shares rose this afternoon, with Irish Life and Permanent gaining 23.3 per cent to trade at 3.7 cent, and AIB rising 4.9 per cent to 4.3 cent. Bank of Ireland stock declined 1.1 per cent to 8.7 cent.
Reuters
