Europe: Sixth straight day of losses for stocks as banks, autos, tech, fall

[LONDON] European shares failed to rebound on Wednesday as weak results from chipmaker STMicro and Deutsche Bank, and falling US stocks, kept the mood bearish despite strong results from Gucci owner Kering that boosted the luxury sector.

The pan-European Stoxx 600 fell 0.2 per cent to a new 22-month low, suffering its sixth straight day of losses as tech, banking and autos stocks tumbled and Wall Street pulled back.

Possible explosives were sent to Hillary Clinton, Barack Obama, and the Time Warner Center - which houses CNN - but traders said the slide in risk appetite wasn't initially directly linked to this.

One trader cited the effect of interest rate increases by the Federal Reserve as a reason for the gloomy outlook before US mid-term elections next month, a test of President Donald Trump's popularity.

"Very ugly out there," said the trader. "Markets just don't appear to be handling the impact of rate hikes... all starting to go wrong for (Trump) just ahead of the midterms!"

"People are still nervy that the dip isn't getting bought properly," said another dealer.

Weighing on risk appetite on Wednesday was the euro zone's manufacturing and services PMI reading showing business growth lost far more momentum than expected, dragged down by waning orders.

But European stocks managed relatively strong gains, seemingly set to break their losing streak until Wall Street's lower open dragged indexes down.

Germany's DAX ended the day down 0.7 per cent while Italy's FTSE MIB fell 1.7 per cent with Italian banks down 3.3 per cent as bonds sold off further.

The banking sector overall, the worst-performing in Europe so far this year, lost 1.4 per cent with Deutsche Bank shares down 4.8 per cent after a steep decline in third-quarter profit.

"In Corporate & Investment Bank the bank is still losing market share (which we fear will continue), while private and commercial bank profitability has disappointed on higher investment spend," analysts at Citi said.

The tech sector slid 1.9 per cent with Franco-Italian chipmaker STMicroelectronics down 10.2 per cent after its third-quarter update slightly missed expectations.

"The company has not provided any commentary on demand trends, but the guidance would suggest some small signs of weakness," said Liberum analysts.

Apple chip supplier AMS extended Tuesday's spectacular fall of 26 per cent, falling 12.2 per cent the day after it disappointed investors with its fourth quarter forecast.

Chipmaker Infineon fell 4.7 per cent while Siltronic tumbled 9 per cent.

Luxury stocks bucked the general trend, recovering some ground after being recently hit by worries over a slowdown in China.

France's Kering climbed 4.8 per cent after its results showed demand for Gucci handbags proved more resilient than expected.

"The 35 per cent organic growth at Gucci and management's confidence there has not been a slowdown in China so far confirmed one of the key features of this cycle - that the strong brands are still winning," wrote Berenberg analysts.

Orion topped the Stoxx, up 9.7 per cent after a study showing a prostate cancer drug it is jointly developing with Bayer can delay the spread of the disease to other parts of the body.

Another strong gainer after results was BIC which rose 6.1 per cent after the maker of ballpoint pens, razors and lighters reported a stronger than expected rebound in third quarter sales.

Boliden shares tumbled 14.9 per cent, the worst Stoxx fallers, after the Swedish mining company said lower metal prices dented third quarter profits.

REUTERS