Miners Drag Europe Stocks to 2-Month Low as China Woes Resurface

  • Insurers slide as SocGen warns of slowdown in U.S. annuities
  • Tesco, Unilever decline amid standoff over product prices

European Stocks Decline as China Fears Resurface

Renewed worries about the health of the global economy, spurred by an unexpected decline in Chinese exports, sent European stocks lower for a third day.

Miners fell from near a 14-month high, with BHP Billiton Ltd. and Rio Tinto Group down at least 4.4 percent, after a report showing exports fell the most since February in the world’s biggest commodity consumer. Insurers and banks were also among the worst performers, dragging the Stoxx Europe 600 Index down 0.9 percent at the close, after it earlier slid as much as 1.4 percent.

The weak data add to worries about Federal Reserve tightening of monetary policy, U.S. elections and an Italian referendum in November, as well as the fallout of Britain’s secession vote. European stocks never fully recovered from a blow dealt by worries about a China slowdown at the start of the year. While the Stoxx 600 has rebounded from a two-year low in February, it remains on track for its first annual drop since 2011, down 8.3 percent.

“China was a big issue at the beginning of the year and now it spooks investors with some issues resurfacing,” said Philippe Gijsels, chief strategy officer at BNP Paribas Fortis in Brussels. “The problems just add to the uncertainty about the world economy, Fed hiking rates, earnings season coming up, elections and referendums coming up. Brexit is starting to hurt markets too because of the tough discussions ahead. It all adds up to typically more volatile period of the year.”

Concerns about corporate earnings have also weighed on equities, putting them on track for a third weekly decline. More than a 150 members in the Stoxx 600 are scheduled to report results this month, and analysts project a profit decline of 4.2 percent this year.

October has yielded the best monthly gains for stocks in recent years, with the Stoxx 600 rising an average 3.5 percent in the past six periods. The benchmark is poised to buck the trend this month, down 2.1 percent, while a gauge of euro-area volatility is heading for its biggest advance since June.

Among shares active on corporate news, Tesco Plc retreated 3 percent after its online store showed no availability of a wide selection of Unilever products amid reports of a standoff between the two companies over rising prices in the wake of the Brexit vote. Unilever fell 3.1 percent after also reporting an unexpected decline in quarterly shipments.

Aegon NV and Prudential Plc led insurers to the second-biggest declines on the Stoxx 600. They fell more than 4.6 percent after Societe Generale SA downgraded the shares, naming them the most vulnerable among European firms to an expected slowdown in U.S. variable-annuity sales.

Banco Popular Espanol SA slid 6.6 percent for the biggest tumble on the Stoxx 600 after a report that its plan to spin off real estate assets into a “bad bank” vehicle may be at risk. Peers Banco Popolare SC and Bankia SA dropped at least 4.3 percent.

The FTSE 100 Index fell for a third straight session, after reaching an intraday record earlier this week. Sports Direct International Plc fell 1.6 percent after Acting Chief Financial Officer Matt Pearson resigned.

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