European Markets Fall 2% on Global Growth Worries

Lucy Stoeva
06 Jan, 2016
New York City

European stocks were sharply lower Wednesday on concerns about the global economic growth. The services PMI in China dropped to a 17-month low in December. Electricite de France SA may record about

[R]4:00 PM Frankfurt – European stocks were sharply lower Wednesday on concerns about the global economic growth. The services PMI in China dropped to a 17-month low in December. Electricite de France SA may record about €6.5 billion in asset sales.[/R]

European stocks were sharply lower on Wednesday on the ongoing concerns about the China slowdown, geopolitical tension, and the pressure on oil and commodity prices.

Global markets were weak today after the latest survey showed weakness in service sector as well in China.

In December, the purchasing managers index for China’s services sector dropped to a 17-month low.

In addition, North Korea announced that it tested and successfully detonated its first hydrogen bomb.

The escalating tension between Iran and Saudi Arabia, two major oil producers, added to the uncertainty.

Crude oil prices continued to slide and the Brent benchmark hit a new 11-year low, down 3.6% to $35.61. In addition, resource stocks led the losers on the new worries related to the deepening slowdown in China.

In the euro zone, the final PMI for the services sector was 54.2 in December, an upgrade from the preliminary reading of 53.9.

The composite PMI rose to 54.3 in December, compared with 54.2 in November.

In London, BHP Billiton tumbled 6.2% and Rio Tinto declined 5.7%.

The FTSE 100 index fell 112.18, or 1.83%, to 6,025.06 and in Frankfurt the DAX index dropped 167.96, or 1.63%, to 10,142.14.

In Paris, CAC 40 index plunged 88.43, or 1.95%, to 4,449.20.

Electricite de France SA fell 1.1% to €12.68 on unconfirmed reports that the electric utility may record about €6.5 billion in asset sales in 2016.

The French newspaper Les Echos said that EDF had an option to sell its 49.9% stake in U.S. Constellation Energy Nuclear Group and 50% of the electricity-transmission systems operator Reseau de Transport d''Electricite.

Volkswagen AG declined 1.07% to €129.9 despite the assurance of the company’s official Herbert Diess that VW can find a solution to its emission-test scandal.

Topps Tiles gained 1.36% to 159 pence after the U.K. retailer said same-store sales for the first 13 weeks of the current financial year increased 4.4% and company credited the increase to store renovations.

The company streamlined its business by closing seven clearance stores and converting the four remaining stores to Topps'' main store format.

The retailer generated sales of more than £212.2 million in the year ended on October 3, compared to £195.2 million a year ago.