European stocks slide on concern about ECB moves
European stocks snapped a six-day winning streak amid investor concern that the European Central Bank is moving toward tightening monetary policy.
By mid-afternoon in Dublin, the Iseq Overall Index was down 0.71pc, or 43.12 points, to 6,022.99.
The mid-afternoon leaders on the Dublin index included drinks group C&C, which had risen 0.7pc to €3.80, while packaging giant Smurfit Kappa was up 0.4pc to €19.76.
On the other side of the board, the laggards included speciality baker Aryzta, which fell 1.8pc to €40.37, while building materials group CRH slipped 1.7pc to €30.08
Elsewhere, the Stoxx Europe 600 Index fell 0.6pc to 344.19 at 3:28pm in London. Optimism had been tentatively returning, with the equity benchmark posting six straight days without losses, after Eurozone economic data began beating forecasts again and concern over lenders eased.
But the fragile sentiment was dented after Bloomberg News reported that an informal consensus was building in the ECB to gradually rein in quantitative easing.
"The central bank may be trying to test the market, see how it reacts to this sort of news and lift some of the pressure we've had on the banking sector," said William Hobbs, head of investment strategy at Barclay's wealth-management unit in London.
"They may have come to the realisation that monetary policy isn't helping the banking sector, which may ultimately make it counter-productive.
"There's going to be a bit of an adjustment, because some market players believe that's what has kept us afloat."
Confidence was also hit yesterday by a report showing the region's economy is losing steam, with a Purchasing Managers' Index for the manufacturing and services sector falling in September from August. The volume of shares changing hands on the Stoxx 600 was about 15pc higher than the 30-day average. Banks, which have lagged the market this year amid concern that lower interest rates are crimping profits, bucked the trend to rise, led by Italian lenders.
Unione di Banche Italiane and Banca Popolare dell'Emilia Romagna advanced 4.8pc or more.
Deutsche Bank, which has lost almost 50pc of its value this year, extended gains into a fifth day - the longest winning streak in eight weeks - as fears that it may need to raise capital abated.
Banks helped Italy's FTSE MIB rise 0.8pc, for the best performance among major western-European markets. UK shares, which touched a record high on Tuesday, fell 0.6pc.