By Sruthi Shankar, Paolo Laudani, and Johann M. Cherian
(Reuters) – European stocks closed lower on Tuesday, as a lack of new details on China’s stimulus measures sparked selling in sectors linked to the world’s second-largest economy, such as mining and luxury goods.
The European index fell by about 1% to touch the lowest level in two weeks, before trimming its losses and falling by 0.55%.
Luxury companies such as LVMH, dry (EPA:), Burberry and Hermès, which derive a large portion of their revenue from China, fell in the range of 0.6% to 4.5%.
Mining company shares fell the most among European sectors, down 4.4%, and iron ore prices also fell after Chinese officials failed to inspire confidence in stimulus plans aimed at reviving the economy. (methyl/L)
Shares of spirits makers Remy Cointreau and Pernod Ricard (EPA:) fell 6.4% and 4.2%, respectively, as China announced temporary anti-dumping measures on brandy imports from the European Union.
Luxury companies and alcoholic drinks makers pressured the French stock index, which underperformed the benchmark Stoxx index and other markets in the monetary union.
“The market can live with a few additional tariffs here and there, but it could escalate if they impose significant tariffs more quickly to really get things under control,” said Chris Beauchamp, senior market analyst at IG Group.
“The negotiations are all about the cars and engine makers at the moment and they are likely to be the key companies to watch.”
The roughly 5% drop in crude oil prices hurt energy-focused exchanges in the UK and Norway, which fell more than 1.3% each.
On the data front, German industrial production rose by a larger-than-expected 2.9% in August, but it did little to lift market sentiment, with traders focusing on the bleak picture for the euro zone economy.
However, the STOXX, along with German, Italian and Spanish stocks, is on track for annual gains, as investors factor in interest rate cuts by the European Central Bank.
Economists polled by Reuters expect the European Central Bank to cut its deposit rate by 25 basis points next week and again in December.
Investors also braced for corporate results in the third quarter, with data compiled by LSEG forecasting a 4.6% increase from a year ago.
Among other movers, Vestry fell 24.3% after the British home builder cut its financial profit forecast for 2024, hurt by an increase in construction costs in one of its divisions.
Imperial Brands shares rose 4% after the Winston cigarette maker forecast 20% to 30% growth in fiscal year 2024 revenue from next-generation products and announced returns to shareholders of 2.8 billion pounds ($3.66 billion).
Comments are closed, but trackbacks and pingbacks are open.