European Markets Close Lower Pressured by China Concerns, S&P's Brazil Downgrade to Junk
European equities contracted Thursday, weighed down by weaker-than-expected production data out of China and rising concerns on companies' exposure to Brazil, which was downgraded to "junk" grade by Standard & Poor's late Wednesday, with a negative outlook.
China's producer price index dropped 5.9% year-on-year in August, declining for a 42nd consecutive month. The index slumped 5.4% in July.
In European macro-economic news, Spain's national statistics agency said the monthly variation in the Industrial Production Index between June and July stood at 0.6%, 0.2 points higher than the variation recorded between May and June. Energy and the non-durable consumer goods sectors registered the biggest positive variation rates and durable consumer goods was the only sector that reported a negative monthly rate.
France's national statistics agency Insee reported that non-farm payrolls added 23,800 jobs in Q2, increasing 0.2% versus Q1. Excluding temporary work, employment remained stable. Insee also noted manufacturing industry output decreased 1% month-on-month in July after falling 0.6% in June. Industry as a whole also contracted, decreasing 0.8% in July.
In equities, mining companies Glencore and BHP Billiton were the biggest decliners on London's FTSE 100, slumping 7.8% and 5.9%, respectively.
On the Paris stock exchange, ArcelorMittal led decliners with a 4% drop, followed by retailer Carrefour, which generates approximately 14% of its revenues in Brazil, sliding 3.3%.
On Germany's DAX, E.ON slumped 7.6% after the utility firm said it would record a significant loss for 2015.
The FTSE 100 closed lower 1.18%, the DAX fell 0.90% and the CAC-40 ended down 1.46%.
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