- Manufacturing, services data signal weak euro-area growth
- Stoxx 600 capped best 4-day gain since February last week
European shares extended declines into a second day, after a rally that lifted them by the most since February, amid indications the region’s economic growth lacks momentum.
The Stoxx Europe 600 Index dropped 1.7 percent at the close of trading. All 19 industry groups retreated, with U.K. insurers sliding on signs of turmoil from the Brexit vote and miners tracking commodities lower. Purchasing managers’ indexes on manufacturing and services signaled lackluster growth in the euro area in June, with indicators pointing to France as the weakest performer.
“Part of the weaknesses or selloff today can be explained by some profit taking after a surprising week,” said Pierre Mouton, who helps manage about $9 billion at Notz, Stucki & Cie. in Geneva. “We have seen this morning that the PMI wasn’t that good for the euro area, and markets can react to economic figures. It might be a good opportunity at the beginning of the third quarter to lighten the positions and wait.”
Standard Life Plc and Aviva Plc fell at least 3.7 percent after their investment units suspended trading in their real-estate funds, as investors demanded their money back in the wake of Britain’s vote to leave the European Union. Banca Monte dei Paschi di Siena SpA tumbled 19 percent after a person familiar with the matter said Italy is considering injecting fresh capital into the lender ahead of stress test results.
Europe’s benchmark resumed declines after jumping 7.6 percent in the four days through Friday. Equities had recovered more than half their losses from the aftermath of the U.K. vote, buoyed by central-bank reassurances about the availability of liquidity. Traders also pushed back bets for further Federal Reserve rate increases until at least 2018.
Brexit is adding to worries about global growth and the efficacy of central-bank stimulus, sending the Stoxx 600 down 11 percent this year. The potential fallout from the referendum is weighing on U.K. property shares and asset management firms.
Aberdeen Asset Management Plc and Schroders Plc fell at least 3.9 percent, while homebuilders Barratt Developments Plc and Bellway Plc tumbled more than 8 percent.
Still, a weakening pound boosted exporters including GlaxoSmithKline Plc and British American Tobacco Plc, sending the FTSE 100 Index higher for the fifth time in six sessions. Bank of England Governor Mark Carney pledged to shore up financial stability, saying the risks from the Brexit vote have started to crystallize.
Stoxx 600 miners declined, halting a five-day winning streak that boosted the gauge to a two-month high yesterday. ArcelorMittal and Antofagasta Plc lost at least 4 percent.
Chr Hansen Holding A/S lost 6.5 percent after the Danish supplier of bacterial cultures used to make Gruyere cheese said lower prices for meat and milk weighed on quarterly sales of animal-health products.