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European stocks extend losses as sentiment wanes; Dax tumbles 1.02%

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Investing.com -

Investing.com - European stocks extended earlier losses on Wednesday, as market sentiment weakened after the World Bank cut its global growth forecast, while the yield gap between euro zone and U.S. government bonds continued to widen.

During European afternoon trade, the DJ Euro Stoxx 50 retreated 0.73%, France's CAC 40 lost 0.86%, while Germany's DAX tumbled 1.02%.

Late Tuesday, the World Bank said tensions in Ukraine and bad weather in the U.S. weighed on global economic expansion in the first half of 2014 and estimated the global economy would grow 2.8% this year, down from a previous forecast of 3.2% made in January.

Borrowing costs in the euro zone have fallen in recent sessions due to the diverging monetary policy stance between the European Central Bank and the Federal Reserve. The yield on the U.S. 10-year Treasury note rose to 2.64% on Tuesday, its highest in a month.

Financial stocks pushed broadly lower, as French lenders Societe Generale (PARIS:SOGN) and BNP Paribas (PARIS:BNPP) tumbled 1.76% and 1.65%, while Germany's Deutsche Bank (XETRA:DBKGn) declined 0.87%.

Among peripheral lenders however, Italy's Intesa Sanpaolo (MILAN:ISP) and Unicredit (MILAN:CRDI) lost 1.04% and 1.27% respectively, while Spanish banks Banco Santander (MADRID:SAN) and BBVA (MADRID:BBVA) plummeted 1% and 1.08%.

Elsewhere, Airbus Group (PARIS:AIR) plunged 4.23% after saying said Emirates canceled its entire order for A350 aircraft valued at $16 billion. The Dubai-based carrier had announced the deal in 2007 and the airliners were due for delivery from 2019.

Vallourec (PARIS:VLLP) added to losses, diving 11.90%, as the French producer of steel pipes said 2014 earnings will be about 10% lower than the previous year because of a reduction in orders from Petroleo Brasileiro (BA:APBR).

In London, FTSE 100 slid 0.60%, still weighed by losses in Rolls-Royce Holdings (LONDON:RR), down 2.14%, after saying Emirates' cancellation reduces its order book by about £2.6 billion.

Meanwhile, U.K. lenders tracked their European counterparts broadly lower as Lloyds Banking (LONDON:LLOY) dipped 0.06% and the Royal Bank of Scotland (LONDON:RBS) dropped 0.56%, while HSBC Holdings (LONDON:HSBA) and Lloyds Banking (LONDON:LLOY) retreated 0.76% and 1.07% respectively.

In the mining sector, stocks remained mixed. Glencore Xstrata (LONDON:GLEN) rose 0.29% and Randgold Resources (LONDON:RRS) gained 0.36%, while Bhp Billiton (LONDON:BLT) shed 0.59% and Vedanta Resources (LONDON:VED) tumbled 1.09%.

On the upside, Sainsbury (LONDON:SBRY) led gains on the index, rallying 2.12%, even after reporting the second straight drop in same-store sales after nine years of growth. Sales at stores open at least a year dropped 1.1%, excluding gasoline, in the 12 weeks ending June 7, the company said.

Also in the U.K., the Office for National Statistics reported that the unemployment rate fell to 6.6% in the three months to April, the lowest since early 2009. The consensus forecast had been for a decline to 6.7% from 6.8% in the previous three months.

In the U.S., equity markets pointed to a lower open. The Dow 30futures pointed to a 0.24% loss, S&P 500futures signaled a 0.28% decline, while the Nasdaq 100futures indicated a 0.24% fall.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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