Wednesday 22 November 2017

European markets suffer worst week since 2011

Traders work on the floor of the New York Stock Exchange. Photo: Reuters
Traders work on the floor of the New York Stock Exchange. Photo: Reuters
Donal O'Donovan

Donal O'Donovan

European shares fell yesterday, with lingering worries about China causing a major regional equity index to suffer its worst weekly loss since August 2011.

The pan-European FTSEurofirst 300 index ended down 1.5pc for a loss of around 7pc over the course of the week.

In Dublin the ISEQ index closed down 3.3pc compared to a week earlier, though up slightly on the day yesterday.

Across Europe, the decline marked the worst weekly performance since early August 2011, when it fell nearly 10pc during the euro zone's sovereign debt crisis.

Equity markets had received a lift earlier in the day from a rise in major Chinese stock indices, after regulators suspended the circuit breaker mechanism that halted trading twice this week. The shutdowns were blamed for exacerbating the sell-offs they were intended to limit.

Some investors said China's ability to manage its markets had been damaged. A fall in the yuan also raised concerns about a slowdown in China, the world's second-biggest economy.

European stocks failed to hold onto an initial move higher after strong US jobs data. Although the data highlighted momentum in the world's biggest economy, it also showed a fall in average hourly earnings.

"Average hourly earnings are not growing, and that's slightly disappointing," said Hantec Markets' analyst Richard Perry.

Jonathan Stubbs, European equity strategist at Citigroup, said despite the latest China-linked fears he expected European shares to rise this year, thanks to signs of economic recovery in the region and higher corporate profits, but markets would remain volatile.

Stubbs forecast the pan-European STOXX 600 index to end 2016 at 400 points - a gain of around 17pc from the current levels.

Additional reporting by Reuters

Irish Independent

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