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Europe Stocks Post Worst Month Since 2011 on Fed, China Concern
[FRANKFURT] European stocks posted their worst month in four years, as investors weighed Federal Reserve comments for clues on the trajectory of interest rates, while confidence waned in China's ability to prop up the market.
The Stoxx Europe 600 Index slid 0.1 per cent to 362.79 at the close of trading, extending its monthly drop to 8.5 per cent. The equity gauge earlier pared losses of as much as 0.7 per cent after data showed the euro area's inflation rate rose faster in August than estimated. The volume of shares changing hands was 56 per cent lower than the 30-day average as the UK market was closed for a holiday.
"There's still no clear message from Jackson Hole and that's the message the entire market is waiting for," said Guillermo Hernandez Sampere, who helps manage about 150 million euros (US$168 million) as head of trading at MPPM EK in Eppstein, Germany. "Any panic created out of this high volatility keeps investors out of the market. The fact that our English colleagues are not in the office affects activity as well."
Worldwide shares plummeted by more than US$5 trillion this month as concern that China's economy may be weaker than previously thought exacerbated investor worry about whether global growth can withstand higher US interest rates.
Shares in the Asian nation capped their biggest two-month tumble since 2008 amid growing concern that government intervention to support the market will fail.
At the same time, investors are seeking to gauge when the Fed will move ahead with its first rate increase since 2006. Bets on a September liftoff climbed after Fed Vice Chairman Stanley Fischer said at the Jackson Hole symposium that there is "good reason" to believe inflation will accelerate.
Among stocks moving on corporate news, Iliad SA fell 4.4 per cent after the French mobile-phone carrier's chief financial officer said domestic competition is intense. RWE AG declined 4.4 per cent after a shareholder estimated that Germany's largest power producer will pay a lower dividend for this year.
Eni SpA advanced 1.5 per cent after saying it discovered a "super giant" natural gas field offshore Egypt.