Europe: Stocks fall most in six weeks on weak German factory data

[LONDON] Declines in carmakers and commodity shares dragged European stocks to their lowest level in more than a month after a report signaled weakness in the German economy.

PSA Peugeot Citroen tumbled 6.5 per cent after predicting that spending would weigh on profit in the coming years. ThyssenKrupp AG fell 4.7 per cent after Vale SA said the German steelmaker is buying its stake in a Brazilian joint venture. ArcelorMittal and Glencore Plc led declines in miners.

The Stoxx Europe 600 Index dropped 1.9 per cent at the close, its biggest drop since Feb 24. All industry groups and most western-European benchmarks declined. The DAX Index tumbled 2.6 per cent after an unexpected drop in German factory orders signaled weakness in Europe's largest economy.

"The expectation of a cool down has been confirmed," said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany.

"There has been no risk-on behavior since ECB's last meeting. Investors' confidence still hasn't returned."

A rebound in the Stoxx 600 since a Feb 11 low has stalled after reaching a two-month high on March 14, helped by optimism over the European Central Bank's stimulus. Investors skeptical of the recovery have withdrawn money from the region's equity funds, while analysts are forecasting profit declines this year, reversing earlier calls for growth.

Lenders, among the most battered industry group of 2016, were the third-worst performers today. Those in Italy led losses, with Banco Popolare SC and Banca Popolare di Milano Scarl sliding at least 6.5 per cent. The country's banks expect the ECB may start setting deadlines for them to sell their bad loans, Reuters reported.

Among other shares active on corporate news, Siemens AG lost 2.5 per cent after people familiar with the matter said Europe's biggest engineering company is among parties that have expressed preliminary interest in Emerson Electric Co's network power division.

Schaeffler AG slipped 7.1 per cent after its founding family sold its remaining non-voting stake in the car-parts producer at the lower end of an offered price range.

BLOOMBERG