Monday 24 October 2016

European stocks retreat as traders bet on more swings ahead

Published 10/09/2016 | 02:30

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

The recent bout of optimism that lifted European equities to their highest levels since April faded, with the shares falling the most in a month as outflows from the region's funds deepened.

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By the close in Dublin, the ISEQ Overall Index was down 1.7pc, or 104.11 points, to end the trading week at 6,182.62.

The leaders on the Dublin index include CPL Resources, which increased 0.9pc to €5.85, while Ryanair increased 1pc to €13.45.

On the other side of the board, the laggards included Kerry Group, which slipped 3.1pc to €74.17, while building materials group CRH dropped 3.1pc to €29.01.

Elsewhere, a 1.1pc decline in the Stoxx Europe 600 Index on took its weekly slide to 1.4pc. While the market has been the calmest in more than a year, investors are preparing for more turmoil ahead. Futures betting on volatility in the next three months trade at their highest levels since 2013 relative to the VStoxx Index.

The European stock rally has once again lost momentum, after US services data indicated on Tuesday the weakest expansion in six years, while European Central Bank President Mario Draghi downplayed the need for more stimulus on Thursday. Worries about economic growth have dragged down the Stoxx 600 for the first week in three, and a Bank of America report showed fund managers withdrew money from the region's equity funds for a 31st straight week - a record streak of outflows.

"People were expecting the ECB to do more," said Pierre Mouton, of Notz, Stucki & Cie in Geneva. "After a strong rally in the past two months, we have more volatility going forward, with the Italian referendum and the US election, so there are many things lingering that are making people nervous after the ECB meeting."

The Stoxx 600 rebounded 14pc from the June low.

Additional reporting by Bloomberg

Irish Independent

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