Paris: European stocks sank for a fifth day in a row on Tuesday, extending the market’s worst sell-off in six months, with banks taking a beating and miners retreating along with metals on worries over tightening in China.
Investors were also rattled by data showing Britain crept out of recession in the fourth quarter of 2009 but only just and with a far weaker growth rate than expected.
Britain’s Office for National Statistics said on Tuesday gross domestic product rose by 0.1% between October and December, well below analysts’ forecasts for growth of 0.4% after an 18-month recession which wiped out 6.0% of output.
At 1244 GMT, the FTSEurofirst 300 index of top European shares was down 0.35% at 1,015.10 points, after dropping to as low as 1,008.01, a level not seen since 11 December.
Europe’s benchmark index, which gained 26% in 2009, is now down 3.1% this year.
“Obama’s plan on the banking sector caught investors off guard, and the sell-off has been surprisingly violent but the morale is still good, there hasn’t been a real change in sentiment,” said David Thebault, head of quantitative sales trading, at Global Equities in Paris.
“We might go down another 2-3% on the downside. At that point, there will be good buying opportunities, particularly for institutional investors although these guys have been frightened by the recent spike in volatility.”
Banking stocks, which were among the top gainers in 2009, have been sharply falling since the White House shocked the market with a plan to curb risk-taking by financial firms.
Banks were by far the biggest losers on Tuesday, with UniCredit down 3.5%, UBS down 2.1%, Deutsche Bank down 2% and Credit Agricole down 1.8%.
The DJ STOXX bank index has tumbled 12% over the past two weeks.
Texas instruments boosts chips
Heavyweight mining shares also lost ground, as commodity prices dropped on mounting fears that China could impose further measures to rein in loan growth, potentially denting the country’s strong appetite for basic resources.
Rio Tinto was down 2%, BHP Billiton down 1.8%, Xstrata down 3.3% and Anglo American down 1.8%.
After strongly outperforming in 2009, the DJ STOXX basic resources sector has lost 4.6% so far this year, featuring among the biggest sector losers.
Around Europe, UK’s FTSE 100 index was down 0.5%, Germany’s DAX index down 0.4% and France’s CAC 40 down 0.6%.
Pharmaceuticals, seen as defensive, gained ground, with Novartis up 1.4% and GlaxoSmithKline up 0.7%.
Germany’s industrial conglomerate Siemens surged 3% after it surprised investors with quarterly profit growth, thanks to cost cuts and a solid performance in its energy and healthcare units.
Chipmaker Infineon and STMicroelectronics rose 0.7% and 1.2% respectively, rising after US rival Texas Instruments said strong sales across all its product segments and regions last quarter would continue, and the firm forecast revenue above Wall Street expectations in the current quarter.