European stocks dragged lower by declines in banks
Published 04/02/2016 | 02:30
Declines in banks dragged European stocks lower for a third day, while investors weighed financial results amid concern over global growth.
By mid afternoon in Dublin, the ISEQ Overall Index was down 1.38pc or 87.93 points to 6,267.91.
The mid-afternoon leaders on the Dublin index included recruitment firm CPL, which increased 0.8pc to €6.20, while insurance group FBD rose 0.5pc to €6.39.
On the other side of the board, the laggards included insulation group Kingspan, which was down 3.8pc to €22.60, while speciality baker Aryzta slipped 1.5pc to €42.85.
Elsewhere, the Stoxx 600 fell 1.9pc by mid-afternoon in London, as all industry groups except miners fell. It briefly inched into positive territory on three occasions yesterday, but failed to sustain gains.
Novo Nordisk and Royal KPN lost at least 1.6pc after reporting worse-than-estimated earnings. A gauge of lenders posted the worst performance in the Stoxx Europe 600 Index, extending its lowest level since 2012.
The regional benchmark deepened a drop after US services data missed estimates, stoking concern about a recovery in the world's biggest economy.
Anxiety about global growth has resurfaced, after a two-week halt to the market sell-off sparked by China's slowdown and an oil rout.
While central bank optimism tempered losses toward the end of last month, the benchmark still had its worst start to a year since the financial crisis.
"The extent of the correction is unjustified in a world where economic conditions haven't drastically changed," said Dirk Thiels, head of investment management at KBC Asset Management in Brussels.
"Sentiment is still below freezing. But fundamentals look pretty solid if you look under the hood. We've added to our equity positions and will be looking at earnings to trigger a shift."
The bar for earnings expectations is getting lower, with analyst cuts to estimates outpacing upgrades by the most since October, according to a Citigroup index tracking the changes.
Risk in credit markets also increased. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies surpassed 100 basis points for the first time since October 2013.
Italian lenders led declines in the sector, with Banco Popolare and Banca Popolare di Milano Scarl tumbling 7.6pc or more amid concern over their piles of bad debt.
Among other stocks active on financial results, Finnish energy company Fortum Oyj slid 13pc after its quarterly comparable operating profit missed projections.
LVMH gained 4.4pc as its fashion and leather-goods sales beat forecasts, while Christian Dior rallied 5.2pc.
Syngenta climbed 2.9pc.