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Worst month in four years for Europe's top markets


Traders work on the floor of the New York Stock Exchange in New York. Photo: Reuters

Traders work on the floor of the New York Stock Exchange in New York. Photo: Reuters


Traders work on the floor of the New York Stock Exchange in New York. Photo: Reuters

Major European stocks posted their worst month in four years in August, as investors weighed Federal Reserve comments for clues on the trajectory of interest rates, while confidence waned in China's ability to prop up the market.

The Eurozone's blue-chip Euro STOXX 50 index fell 1pc going into the close of the trading session, while Germany's DAX and France's CAC each fell 0.9pc.

The pan-European FTSEurofirst 300 index eased 0.5pc, putting it on track also for its worst month since August 2011.

Volumes were relatively thin as the UK market was closed for a public holiday.

The ISEQ bucked the trend a little, and posted its worst monthly decline since October of last year.

The Federal Reserve left open on Friday the possibility of a September rate rise, although several of its officials said the prolonged turmoil in financial markets might delay the first policy tightening in nearly a decade.

Weaker Asian markets, coupled with more volatility in Chinese stock markets which have fallen sharply this month amid signs of a slowdown in the Chinese economy, also weighed on European equities.

Meanwhile, China's yuan rose for the fourth day, trimming the biggest monthly loss since 1994, after Premier Li Keqiang signalled support for the currency following a devaluation that rattled global markets and shook confidence in the world's second-largest economy.

The yuan climbed 0.19pc to close at 6.3763 a dollar in Shanghai, according to China Foreign Exchange Trade System prices. That takes its advance in the past four sessions to 0.6pc and pares its loss for August to 2.6pc.

There's no basis for yuan declines to continue, Premier Li said late last week.

Using words such as "basically stable" and "reasonable and equilibrium level," he added to efforts to calm

investors after a period of depreciation tested the central bank's commitment to a new, more market-driven exchange-rate system.

"The government's verbal interventions have improved market sentiment," said Tommy Xie, an economist at Oversea-Chinese Banking corporation in Singapore.

"Investors are confident the authorities have the capability to stabilise the yuan at around 6.4 against the dollar as the stock market is in turmoil."

Policy makers are trying to balance the need for financial stability with a desire for stronger exports and the yuan's inclusion in the International Monetary Fund's basket of reserve currencies. (Bloomberg)

Irish Independent