Politics and euro hit European shares
Political tensions and a surging euro sent European shares to their lowest in six months yesterday after a missile launch by North Korea sapped global risk appetite.
The pan-European STOXX 600 ended the session down 1 pc, recovering some of the ground lost earlier in the day but still firmly on track to make August its third month of declines in a row.
Britain's FTSE fell 0.9pc and the exporter-heavy DAX hit a five-month low. The euro surged above $1.20 for the first time since January 2015, after European Central Bank Chief Mario Draghi chose at last week's Jackson Hole conference not to talk down a currency that has gained 14pc year-to-date against the dollar.
With risk aversion escalating after Pyongyang fired a missile over northern Japan, all market sectors fell in Europe.
Among the only bright spots were gold miners Randgold Resources and Fresnillo, up 4.6pc and 2.6pc respectively, as safe-haven asset gold soared to a 9-and-a-half month high.
Banking stocks sank 1.4pc to a two-month low. The VSTOXX, a gauge of European investor anxiety, jumped to its highest in a week.
"I think today's correction is more due to the stronger euro, and North Korea is more an excuse or a catalyst," said Angelo Meda, fund manager at Banor SIM. "Markets are discounting the impact of EUR/USD on European earnings, but as of today it's too early to call for a long-term correction," he added, saying the US market was still supported by low interest rates and good earnings growth.
German commercial broadcaster Prosiebensat fell 14.5pc after flagging a weaker outlook for advertising in the third quarter, the third cut in advertising guidance this year according to Deutsche Bank analysts.