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European shares dip as shrinking German economy stokes slowdown fears


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UPDATE 1-European shares dip as shrinking German economy stokes slowdown fears


* German economy contracts as export engine sputters

* Bund yield hits new record low

* Schindler slides on posting lower Q2 profit (Adds details on German economy, comment; Updates prices)

Aug 14 (Reuters) - European shares fell on Wednesday, as ashrinking German economy and weak industrial data from Chinastoked fears of a global slowdown, forcing investors to turndefensive and overshadowing a temporary U.S.-China tariff truce.

The pan-European STOXX 600 index .STOXX fell 0.2% by 0820GMT, with banks <.SX7P > weighing on the benchmark, while thedefensive healthcare .SXDP , utilities .SX6P and telecom .SXKP sectors outperformed.

U.S. President Donald Trump's administration delayedimposing a 10% tariff on certain Chinese products, includinglaptops and cell phones, beyond September on Tuesday, providingbattered equity markets world-wide some relief. urn:newsml:reuters.com:*:nL2N2590HM

However, weak industrial data from China and a contractionfor export-reliant German economy in the second quarter was areminder that the impact of the drawn out trade war between theUnited States and China is far from over. urn:newsml:reuters.com:*:nL4N2542BUurn:newsml:reuters.com:*:nL8N25A1D1

"The German GDP numbers kicked off the day badly forEuropean markets, outweighing the limited positive impact fromthe Trump tariff relief," said Chris Beauchamp, chief marketanalyst at IG Group in London.

The Frankfurt-dominated auto index .SXAP fell more than1%, while borrowing costs in Germany fell to fresh record lowsfollowing the GDP data, reinforcing expectations for monetarypolicy stimulus soon. urn:newsml:reuters.com:*:nL8N25A1VV

Market participants are now keeping watch for a read-out ofsecond quarter GDP numbers in the eurozone due later in the day.

Stalled growth across Europe has been led by a slowdown inthe eurozone's largest economy, Germany, while the fallout fromWashington's trade war with China, Brexit uncertainty, andItaly's political woes have also plagued the trading bloc.

"If Germany sneezes the rest of us catch a cold, so this isa particularly depressing outlook for the euro zone andreinforces the view that outside the U.S. things aren't goingwell." said Beauchamp.

In corporate news, shares of Swiss elevator and escalatormanufacturer SchindlerSCHP.S fell 4.3% after it reported a22% drop in second-quarter profit, dented by wage inflation,higher material costs, foreign exchange, and planned highercosts. urn:newsml:reuters.com:*:nL8N25A0J2

Balfour Beatty PlcBALF.L shares jumped 9% after theBritish infrastructure company reported higher first-halfunderlying pretax profit and increased its annual cash forecast. urn:newsml:reuters.com:*:nL4N25A1X2 (Reporting by Agamoni Ghosh and Shreyashi Sanyal in Bengaluru;Editing by Bernard Orr) ((Agamoni.Ghosh@thomsonreuters.com; +918067491130))






This article appears in: Politics , World Markets , US Markets , Stocks



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