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Europe: Shares fall as commodity stocks and Next slide

Friday, March 25, 2016 - 07:32

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[LONDON] European equities fell for a fourth straight session on Thursday, weighed down by a drop in the shares of major mining and energy companies, while fashion retailer Next also slumped.

The pan-European FTSEurofirst 300 index ended down 1.5 per cent on the last trading day of the week, with volumes relatively thin ahead of the Easter holidays. It also had its secondly weekly loss in a row.

The US dollar rose on currency markets after St Louis Fed President James Bullard said another US interest rate hike"may not be far off." However, this in turn impacted European mining stocks since a stronger dollar makes metals more expensive for the holders of other currencies.

Shares in Anglo American, Glencore, Rio Tinto all slumped, with the STOXX Europe 600 Basic Resources Index - which contains those mining stocks - down 1.6 per cent.

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The STOXX Europe 600 Oil and Gas index also shed 1.3 per cent, dragged down by a drop in Royal Dutch Shell, Total and BP, as oil prices fell.

"Equity markets are moving into the Easter holiday long weekend on a more cautious note, with a stronger dollar following some hawkish Fed comments weighing on the commodities space," said Mike van Dulken, head of research at Accendo Markets. "Oil prices have also been hit by ever rising US crude inventories, adding to global supply glut concerns."

British clothing retailer Next slumped 15 per cent. Next posted a 5 per cent rise in annual profit, but cautioned 2016 could be the toughest it has faced since 2008 as it anticipates a more difficult economic environment.

The FTSEurofirst 300 is down by around 8 per cent since the start of 2016, partly due to worries about a China-led global economic slowdown.

REUTERS

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