European equities retreated on the penultimate trading day of the week as the automobile sector continued to contract and investors waited for Federal Reserve Chairwoman Janet Yellen to deliver a speech that is expected to shed light on the central bank's time frame for raising US rates.
In company news, financial services and mining stocks were among the biggest decliners on London's FTSE 100 Index, with commodity stocks Glencore, Anglo American, Antofagasta and BHP Billiton ( BHP ) slumping by 9.6%, 5.1%, 2.5% and 2.2%, respectively. Blackrock ( BLK ) cut its stake in BHP to below the 5% threshold. Old Mutual, Aberdeen Asset Management and HSBC ( HSBC ), all financial services companies, fell by 4.3%, 3.5% and 2.1%, respectively.
In Germany and France, automobile makers and companies supplying parts to automobile stocks were among the biggest decliners the day after Michael Wintekorn resigned from his post as CEO of Volkswagen. Winterkorn's departure came six days after the US Environmental Protection Agency alleged that Volkswagen had used software that circumvented emissions testing for certain air pollutants.
In a statement issued on Wednesday, Winterkorn said "I am stunned that misconduct on such a scale was possible in the Volkswagen Group" but said he is "convinced that the Volkswagen Group and its team will overcome this grave crisis". Reports say Porsche's CEO will takeover at Volkswagen and that the U.S. CEO of Volkswagen will be fired.
Volkswagen ended the day 0.6% higher, while carmakers BMW and Daimler fell 5.2% and 4.4%, respectively on the DAX. BMW reportedly may be facing emissions allegations now, too. Other decliners on Germany's benchmark index included cement maker HeidelbergCement, utility company RWE, kidney dialysis company Fresenius Medical Care ( FMS ), and telecommunication company Deutsche Telekom, down by 3.6%, 3.3%, 2.5% and 2.1%, respectively.
And, on the Paris stock exchange, chemical company Solvay slid by 4.7%, leading decliners, followed by luxury goods maker Kering, down 4.7%. Carmaker Peugeot was down 3.7% and hypermarket operator Carrefour fell 3.4%.
While equity indices took a hit, the picture wasn't entirely negative. The closely watched Ifo Business Climate Index for German industry and trade rose in September to 108.5 from 108.4 points last month. Companies surveyed by the Munich-based think tank assessed their current business situation slightly less favorably than in August. However, they expressed greater optimism about future business developments. The survey reported that the business climate brightened in trade with wholesalers more satisfied with their current business situation. In retail, assessments of the current business situation improved clearly for the third month in succession.
The FTSE 100 slid by 1.17%, the DAX skidded down 1.92% and the CAC-40 contracted by 1.93%.
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