Friday 30 September 2016

European shares fall as commodity stocks and Next slide

Published 25/03/2016 | 09:09

Traders talk in front of the German share price index DAX board at the stock exchange in Frankfurt, Germany
Traders talk in front of the German share price index DAX board at the stock exchange in Frankfurt, Germany

European equities fell for a fourth straight session on Thursday, weighed down by a drop in the shares of major mining and energy companies, while fashion retailer Next also slumped.

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The pan-European FTSEurofirst 300 index ended down 1.5pc on the last trading day of the week, with volumes relatively thin ahead of the Easter holidays. It also had its secondly weekly loss in a row.

The U.S. dollar rose on currency markets after St Louis Fed President James Bullard said another U.S. interest rate hike "may not be far off."

However, this in turn impacted European mining stocks since a stronger dollar makes metals more expensive for the holders of other currencies.

Shares in Anglo American, Glencore, Rio Tinto all slumped, with the STOXX Europe 600 Basic Resources Index - which contains those mining stocks - down 1.6pc.

The STOXX Europe 600 Oil and Gas index also shed 1.3pc, dragged down by a drop in Royal Dutch Shell, Total and BP, as oil prices fell.

"Equity markets are moving into the Easter holiday long weekend on a more cautious note, with a stronger dollar following some hawkish Fed comments weighing on the commodities space," said Mike van Dulken, head of research at Accendo Markets.

"Oil prices have also been hit by ever rising U.S. crude inventories, adding to global supply glut concerns."

British clothing retailer Next slumped 15pc. Next posted a 5pc rise in annual profit, but cautioned 2016 could be the toughest it has faced since 2008 as it anticipates a more difficult economic environment.

The FTSEurofirst 300 is down by around 8pc since the start of 2016, partly due to worries about a China-led global economic slowdown.

Reuters

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