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Europe: Stocks fall in holiday lull, set for best year in a decade

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European shares posted their steepest one-day loss in four weeks on Monday as investors cashed in gains from a record run higher that has put the benchmark index on course for its best year since the global financial crisis.

[BENGALURU] European shares posted their steepest one-day loss in four weeks on Monday as investors cashed in gains from a record run higher that has put the benchmark index on course for its best year since the global financial crisis.

In a holiday-shortened week, the pan-European STOXX 600 index closed 0.9 per cent lower in volumes that were less than a third of the average so far this month. The index is up 24 per cent so far this year, on track for its biggest annual rise since 2009.

A fall on Wall Street saw regional bourses steepen losses as the decline spread to all sectors.

"Volumes are... below average and people are doing as little as possible - a little bit of profit taking and a little bit of window dressing as it's the year-end," said Mirabaud sales trader Mark Taylor.

Industrials and other defensive sectors such as healthcare led losses, while banks, one of the major underperformers for the year, lost the least.

Frankfurt shares fell more than half a per cent, while those in France, Italy and Spain dropped around 1 per cent each. London-listed shares dipped 0.8 per cent.

White House trade adviser Peter Navarro's comments on Monday that the US-China Phase 1 trade deal would likely be signed next week failed to cheer investors as they await confirmation from US Trade Representative Robert Lighthizer or President Donald Trump.

After somewhat choppy trading earlier in the year, European equities have enjoyed a strong December as investors received clarity on two of the major risks to global economic growth - the US-China trade war and Brexit.

Fairly upbeat economic data from around the world has also eased recession fears, with latest figures showing Spain's economy growing 0.4 per cent in the third quarter, in line with a flash estimate.

In corporate news, spectacles group EssilorLuxottica shed 3.1 per cent, its largest daily drop in four weeks, after saying it had discovered fraudulent activity at a plant in Thailand that was expected to cost it 190 million euros (S$286.9 million).

Among other individual stocks, Swiss lender Cembra fell 3.8 per cent, the most on the STOXX 600 and its biggest one-day fall in more than two months, after gaining nearly 3 per cent over the last three sessions.

Looking ahead to 2020, David Madden, a market analyst at CMC Markets, sees the travel sector being held back, with rising fuel costs being one of the factors.

REUTERS