Europe: Shares hit one-week low as commodities stocks slump

[LONDON] European equities fell for a second straight session to a one-week low on Wednesday, with further selling pressure on commodities-related shares as prices of copper and crude oil slipped.

The pan-European FTSEurofirst 300 index ended down 2.3 per cent at its lowest level in around a week, extending losses from a 1.3 per cent slide in the previous session.

The index has fallen 12 per cent so far in 2016, as concerns about a slowdown in China - the world's second-biggest economy and a major commodities consumer - have hit world markets.

Commodities-focused stocks bore the brunt of the sell-off, with the STOXX Europe 600 Basic Resources index dropping 6.5 per cent after copper prices fell on persistent concerns about the state of the Chinese economy.

The European oil and gas index also slipped 2.8 per cent, tracking a decline in oil prices after top exporter Saudi Arabia ruled out production cuts.

Shares in miners such as Anglo American, Glencore , BHP Billiton, and oil majors BP and Royal Dutch Shell all fell sharply.

"The upside potential for commodity prices and commodity-related stocks is limited as there is still a lot of excess supply of commodities. It's not a good time to increase your exposure to the sector," said Commerzbank economist Peter Dixon.

Standard Chartered also fell 4.4 per cent, extending the previous session's 6.7 per cent drop after it reported a slump in profit, as Bank of America Merrill Lynch, Deutsche Bank and Nomura cut their target prices on it.

However, shares in Wolters Kluwer rose 5.2 per cent, the top gainer in the FTSEurofirst 300 index, after the Dutch business information and publishing company reported slightly better-than-expected results.

According to Thomson Reuters StarMine data, 55 per cent of the companies on the European STOXX 600 index have met or beaten analyst forecasts with their fourth quarter results so far, while 45 per cent have missed market forecasts.

REUTERS