European Stock Rally Runs Out of Steam Amid China Growth Concern

The Stoxx Europe 600 Index Dropped 0.9 Percent
  • Africa Oil surges after selling stake to Maersk; Tullow rises
  • Continental leads drop in carmakers after sales miss estimates

European stocks fell, after rising four times in the past five days, as investors weighed the outlook for global economic growth and stimulus.

Shares of exporters fell after worse-than-forecast Chinese trade data. Continental AG led a drop in carmakers, losing 5.3 percent, after its sales missed analysts’ projections. Renault SA slid 3.5 percent after France, the company’s biggest shareholder, said it would oppose a merger with Japanese partner Nissan Motor Co. Personal and household-goods shares slid, with Hermes International SCA and Christian Dior SE down at least 2.1 percent.

"There is some caution on the consumer side and export-led sectors that comes from questions about the Chinese economy and emerging markets as a whole,” said Pierre Mouton, a fund manager at Notz, Stucki & Cie. in Geneva. “The economic numbers from China are not very good for the time being.”

The Stoxx Europe 600 Index lost 1.1 percent at the close of trading. Portugal’s PSI 20 Index slid 4.1 percent, the most among western-European markets. The nation’s opposition parties agreed to join forces to oust the current administration, boosting prospects of a new government that’s against spending cuts linked to an international bailout.

ECB, Fed

The Stoxx 600 rose 1.2 percent last week after President Mario Draghi reiterated that the European Central Bank will consider increasing stimulus at its December meeting, and the euro fell against the dollar as stronger American data raised the odds of a U.S. rate hike next month.

“You have the build-up to both the Fed and the ECB meetings in December,” said Daniel Murray, London-based head of research at EFG Asset Management. “Now that earnings are largely out of the way too, we’re looking for catalysts. One could imagine a situation where markets might drift until now and those meetings.”

Among stocks active on corporate news, InterContinental Hotels Group Plc fell 4.8 percent after it said it was not considering a potential sale or merger of the company. Serco Group Plc climbed 5.5 percent after saying an agreement with the Australian government will decrease the amount the company has to hold in provisions against future contract losses.

Africa Oil Corp. surged 27 percent after A.P. Moeller-Maersk A/S agreed to buy some of its assets in Uganda and Kenya. Tullow Oil Plc, a partner in Kenya, added 4.5 percent. Trelleborg AB rallied 9.8 percent after the maker of polymer products said it will buy Czech CGS Holding a.s.

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