Europe: Equities fall on global commodity storm

[LONDON] European stocks lost ground on Wednesday with miner Anglo American, at the centre of a global "commodity storm", striking new historic lows before an afternoon fightback, dealers said.

Markets had opened with slender gains after the previous day's heavy commodity-fuelled losses, but stumbled once more as investors eyed a fresh collapse in Anglo's shares.

A modest recovery in oil prices - with Brent crude bobbing back above $40 per barrel - was shrugged off by markets, which also remain anxious over China's ongoing economic woes.

"This morning's tentative gains look like they were a mere stop-gap, the brief calm before the resumption of the commodity storm," said Spreadex analyst Connor Campbell.

"With little to distract investors, it's hard not to linger on the whopping 85,000 jobs Anglo is set to slash - and, of course, that suspended dividend." Anglo American struck a new all-time low at 277.6 pence, but later recovered ground to close off by 1.2 per cent at 319.7 a day after the firm announced an "accelerated and more radical restructuring programme" designed "to transform the Company's competitive position.

Anglo had revealed plans Tuesday to slash its workforce from 135,000 staff to 50,000 after 2017, adding that it would suspend dividend payments until the end of next year in response to collapsing commodity demand and prices.

Noting the recovery of miners, James Hughes of GKFX identified a "relative calm ahead of the next week's key Fed interest rate decision."

At the close in London, the FTSE 100 index was 0.14 per cent down after earlier small gains while Frankfurt fell 0.6 per cent despite Volkswagen's strong 6.2 per cent rally on a report that allegations it lied over carbon dioxide emissions were unfounded.

Paris shed 0.9 per cent in value.

This week's Anglo news has prompted heightened worries about the outlook for mining and metals companies across the world, dealers said.

"Equities (are) on another downer as the commodity sector remains under considerable pressure, the Anglo American dividend cut rippling through and generating uncertainty about income sustainability elsewhere," said Mike van Dulken, head of research at traders Accendo Markets.

Steelmakers lost ground early in the session but fought back. ArcelorMittal shed 2.4 per cent before ending up 3.5 per cent in Paris, and ThyssenKrupp ended up 0.1 per cent after first losing 0.9 per cent in Frankfurt.

In Asia meanwhile, China's ongoing economic woes cast a pall over the region's trading floors after a downturn on Wall Street, but rising oil prices gave some respite for energy firms.

However, the oil market is still struggling around seven-year lows and analysts said the gloom was likely to last for some time.

"We believe that the current crude oversupply in the global market will persist over the coming years, reinforcing our flat outlook for oil prices over 2015-2017," BMI Research said in a market commentary.

A global supply glut, weak demand and the growth slowdown in China have combined with soaring production to send crude slumping more than 60 per cent over the past 18 months.

US stocks dipped in early trading with the Dow Jones Industrial Average off 0.22 per cent, before edging up to be almost unchanged mid-session while the broad-based S&P 500 and the tech-rich Nasdaq Composite Index each lost 1 per cent.

But news of a possible mega-merger lifted DuPont 9.4 per cent and Dow Chemical 10.3 per cent as the pair consider combining to create the world's biggest chemical company with annual sales of more than US$90 billion.

The Tokyo stock market closed 1.0 per cent lower, Sydney fell 0.3 per cent and Hong Kong lost 0.5 per cent, while Taipei, Singapore and Kuala Lumpur were also in negative territory.

However, Shanghai rose 0.07 after a slightly better-than-forecast inflation reading for November, and on hopes of new stimulus measures for the world's number two economy.

In foreign exchange activity on Wednesday, the euro climbed against the dollar.

AFP