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Miners, weak earnings drag European stocks lower

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 8, 2021. (Reuters photo)

European stocks retreated from six-week highs on Thursday, with miners leading the declines on renewed concerns about China's property sector, while mixed quarterly updates from companies dampened risk appetite.

The Europe-wide STOXX 600 index (.STOXX) fell 0.2% due to a dour mood in global markets following the collapse of a $2.6 billion asset sale at indebted developer China Evergrande Group. read more

European miners (.SXPP), which have a large exposure to China (.SXPP), shed 2.5%. UK-listed shares of Anglo American (AAL.L) fell 3.7% even though it reported a 2% rise in overall production in the third quarter.

Worries about China's plan to bring down coal prices hit high-flying metal prices on Wednesday. read more

"China's macro cycle has troughed, but growth remains subdued," said Andreas Bruckner, Bank of America's European equity strategist, who earlier this month set a year-end target of 420 for the STOXX 600, implying a fall of about 10% from current levels.

"The downside risks relative to our projections are increasing, given the potential additional drag from supply-chain disruptions, energy shortages in Europe and China, the intensifying debt crisis in China's property sector, and the risk of a central bank policy mistake."

Swiss engineering and tech group ABB (ABBN.S) tumbled nearly 6% after it lowered its full-year sales forecast and warned of shortages of components, while Sweden's AB Volvo (VOLVb.ST) fell about 0.8% after it said chip shortages hampered production of its trucks. read more

There was no relief for banking stocks (.SX7P) either. The sector fell 0.9% even though UK's Barclays (BARC.L) and Finland's Nordea reported upbeat quarterly results. read more

Defensive sectors lent support to European bourses as personal and household goods index (.SXQP) rose 0.7% on the back of Unilever's (ULVR.L) third-quarter earnings beat. read more

Luxury stocks were also higher after Birkin bag maker Hermes (HRMS.PA) rose 0.8% on strong quarterly sales. read more

Cartier-owner Richemont (CFR.S) advanced 0.4% after HSBC (HSBA.L) raised the brand to "buy" from "hold", citing its leadership and momentum in the jewellery industry.

(Source: Reuters)


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