By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved sharply
lower on Monday after weaker-than-expected U.S. home-sales data and
as continued uncertainty about growth in emerging markets triggered
a flight out of riskier assets such as equities.
The Stoxx Europe 600 index lost 0.8% to end at 322.02, marking
the lowest closing level since Dec. 20.
On Friday, the benchmark ended its worst week since June, after
renewed worries about growth in China spurred a sharp selloff in
emerging-markets currencies. Asia markets closed in deep-red
territory on Monday, while U.S. stocks were mostly lower.
"Long-standing fears, centered on the emerging market economies,
appear to have finally captured investors' attention," said Mike
Ingram, market strategist at BGC Brokers, in emailed comments.
"Volatility is up, as are traded volumes and overall this looks
to be the first true 'risk off' episode markets have suffered since
last summer's taper-inspired rout," he added.
Adding pressure on the pan-European index on Monday, shares of
BG Group PLC sank 14% after the energy company warned its
oil-and-gas output this year will be lower than previously forecast
partly due to turmoil in Egypt. The group declared "force majeure"
on contracts in Egypt, because the country's government had not
honored BG's share of gas from fields, leading to high levels of
export volumes being diverted back to the local market.
Vodafone Group PLC (VOD) dropped 3.9% after AT&T Inc. (T)
said it has no intention of making an offer for the U.K. telecoms
firm. In other Vodafone news, British newspaper the Times reported
that the group has approached the private-equity owners of a
Spanish broadband operator about a potential 7 billion pound ($11.6
billion) offer. A representative from Vodafone declined to comment
on the report.
On a more upbeat note, shares of LM Ericsson Telefon AB gained
2.3% after it signed a deal with Samsung Electronics Co. on global
patent licenses, putting an end to related litigation between the
two companies.
U.S. and German data in the spotlight
The broader market trimmed losses in midday trade, but was sent
firmly lower again in the afternoon after U.S. home-sales figures
missed expectations. The housing market showed one of the first
signs of recovery in the U.S. after the financial crisis and has
been of the key economic drivers at times when other sectors were
slowing.
Upbeat German business-confidence data further failed to lift
the broader trading mood. The Ifo Business Climate index rose for a
third time in a row in January to reach a two-and-a-half-year high,
while the assessment of the current business situation in Germany
climbed to its highest level since June 2012.
The DAX 30 index , however, gave up 0.5% to 9,349.22. Elsewhere,
the U.K.'s FTSE 100 index slid 1.7% to 6,550.66, and France's CAC
40 index dropped 0.4% to 4,144.56.
Shares of Royal Bank of Scotland Group PLC (RBS) dropped 2.2% in
London after the bank said it set aside an additional GBP2.87
billion to cover U.S. litigation and to repay customers who were
missold Payment Protection Insurance.
Shares of Lanxess AG rallied 8.2% in Frankfurt after the
chemicals firm said chief executive Axel Heitmann will leave at the
end of February, to be replaced by Matthias Zachert, currently
chief financial officer at Merck KGaA . Merck shares slid 10%.
Shares of Banco Popolare SC dropped 15% after the Italian bank
said on Friday it will raise as much as EUR1.5 billion through a
rights issue in an effort to boost capital. Other Italian banks
mirrored the losses, with Banca Popolare dell'Emilia Romagna SCARL
down 7.9% and Banca Popolare di Milano SCARL 5.6% lower.
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