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Europe: Stocks stumble on China, US technology woes

[LONDON] European shares slid on Wednesday, with the mining sector hit by renewed concern over China and after disappointing earnings figures from US technology giants Apple, Yahoo and Microsoft.

London's benchmark FTSE 100 index fell 1.50 per cent to close the day at 6,667.34 points, with mining companies hit hard by stubborn worries over Chinese demand.

In the eurozone, the CAC 40 in Paris shed 0.47 per cent to 5,082.57 points and Frankfurt's DAX 30 dropped 0.72 per cent to 11,520.67 points.

In foreign exchange, the euro slid to $1.0890 from $1.0942 late in New York on Tuesday, as dealers awaited a second Greek parliamentary vote on its vast reforms-for-cash bailout deal.

London's mining sector faced fierce selling pressure, with sentiment dented by sliding metal prices.

Anglo American slumped 5.6 per cent to 813.50 pence. BHP Billiton tumbled 5.7 per cent to 1,180 pence, and Rio Tinto lost 3.6 per cent to 2,502.5 pence.

"The London market has been hit hardest by the mining sector, which is taking its cues from the financial turbulence in China," said analyst David Madden at trading firm IG.

"The wheels are starting to come off in China, and if Beijing is having trouble keeping its stock market in check, it does not inspire confidence in its position as the biggest importer of minerals in the world." London-listed ARM Holdings, whose microchip designs are used to help power Apple's iPads, saw its share price dive 6.6 per cent to 970 pence on the Apple results, despite an upbeat outlook and dividend hike from the British chipmaker.

"The stock market's reliance on iPhones was laid bare today," said CMC Markets UK analyst Jasper Lawler.

"A poorly received quarterly earnings update from Apple reverberated across the Atlantic into falling prices across Europe's tech sector and weighed on a broader belief in rising corporate profitability," he said.

Overnight, Apple posted a 38 per cent jump in quarterly net profit, but its shares slid as analysts had expected more, while revenue forecasts also weighed on investor sentiment.

The US tech giant's profit soared to US$10.7 billion on surging iPhone sales in the quarter that ended on June 27, from US$7.7 billion a year earlier.

Microsoft meanwhile announced a net loss of US$3.19 billion in the past quarter, blaming a hefty writedown on the smartphone business it acquired from Nokia.

Elsewhere in the sector, Yahoo revealed it had swung to a loss of US$22 million in the second quarter, but revenues grew as the Internet pioneer refocused its efforts on mobile and other growing sectors.

That sent Wall Street shares down at the opening bell, where they stayed all morning.

The tech-rich Nasdaq Composite Index had fallen 0.79 per cent to stand at 5,167.22 points in midday trading.

The Dow Jones Industrial Average slid 0.46 per cent to 17,837.62, while the broad-based S&P 500 gave up 0.29 per cent to 2,112.96.

Shares in Apple tumbled 5.2 per cent to $123.97, Microsoft's stock dropped 3.3 per cent to $45.73, while Yahoo shed 0.81 per cent to $39.41.

"UK and European equities have followed the wider global market lower after both new and old technology results disappointed," said Rebecca O'Keeffe, investment head at broker Interactive Investor.

"Since Google's performance last week, expectations had been running high that the sector would provide the momentum for further equity market growth.

"However, with Apple, Microsoft and Yahoo all failing to meet investor expectations, the outlook has paled amid concerns that prices in the sector have overshot." Asian markets mostly retreated following the negative lead from Wall Street, where sentiment was also hit by poor earnings news from IBM and United Technologies.

Elsewhere, the British pound edged higher after the Bank of England (BoE) said its nine-member monetary policy committee had voted unanimously earlier this month to hold interest rates.

The pound was at $1.5613 in late European trading, compared to $1.557 late on Tuesday.

BoE governor Mark Carney had indicated last week that Britain's record-low 0.50 per cent lending rate could start to rise at the turn of the year.

AFP