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Europe: Shares knocked down by mining, bank and travel stocks


[LONDON] European shares fell on Wednesday, hit by a drop in commodity stocks and banks, while the travel sector came under pressure after the United States issued a travel alert over the possibility of attacks in Europe this summer.

The pan-European STOXX 600 and FTSEurofirst 300 indexes both fell by around one per cent, each having already declined by 0.8 per cent on Tuesday.

The worst-performing sector was the STOXX 600 Basic Resources index, which contains major mining stocks and which fell by 2.8 per cent after Chinese economic data.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) showed activity at China's factories shrank for a 15th straight month in May, suggesting that the world's second-largest economy and the top global consumer of metals is still struggling to regain traction.

"Overnight, China PMI figures were a mixed bag, with official figures showing marginal growth and unofficial (data) indicating a slowdown," said Ana Thaker, market economist at PhillipCapital UK.

"China has expressed a desire to move to a consumer led economy but these figures pose a problem for the country as it struggles to boost the non-manufacturing sector."

Oil and gas shares fell, tracking weaker oil prices which retreated on expectations that an Opec meeting would shun any curbs on output.

The travel and leisure sector also underperformed to fall 1.9 per cent, after the United States warned of possible terror attacks this summer in Europe.

French travel and tourism stocks, such as Air France KLM and hotels group Accor, led the sector lower.

The French travel industry is already being hit by strikes, and the Euro 2016 soccer tournament, starting next week, is seen as a major security challenge. "I'd have thought that Accor is suffering a bit," said Rupert Baker, European equity sales executive at Mirabaud Securities.

Italian banking shares were dragged down by Banco Popolare, which dropped 6.3 per cent after media reports said Italy's market watchdog will give its go ahead to the bank's cash call later today.

Portugal's Banco Comercial Portugues slumped 10.8 per cent as borrowing costs in the 'peripheral' euro zone countries of Spain, Italy and Portugal rose, with uncertainty over Britain's vote this month over its membership of the European Union weighing on markets.

However, Ahold rose 2.5 per cent after the Dutch supermarket operator's results beat forecasts.