European stocks slump on finance sector worries
LONDON - Agence France-Presse
AP photoEuropean stock markets slumped on Feb. 8, giving up initial gains, as focus switched to the banking sector following recent poor earnings and persistent worries over China’s economy, analysts said.
After a quiet session across Asia owing to the Chinese New Year, Europe opened higher but indices were down more than 2 percent in London and more than 3 percent in Paris and Frankfurt in afternoon trading, with the DAX falling below 9,000 points for the first time since October 2014.
Madrid was down 3.3 percent and the main index in Athens was down more than 7 percent.
Focus turned to the banking sector after the spotlight having been firmly on commodity stocks in recent weeks owing to slumping oil and metals prices. The rout deepened after oil prices resumed their slide.
Global shares had already tumbled on Feb. 5 after U.S. jobs data sparked worries that the Federal Reserve could decide to raise rates again as soon as March.
Concerns linger also over weak growth in the eurozone and emerging-market economies.
“European markets, after initially opening higher, have been led sharply lower by banking shares, a number of which are hitting multi-year lows,” said Michael Hewson, chief market analyst at traders CMC Markets UK.
“The disappointing (recent) earnings across the sector from the big U.S. firms to Credit Suisse and Deutsche Bank in Europe alongside the ugly specter of negative interest rates have seen investors significantly reassess the chance of an earnings turnaround after years of regulatory fines for past misdeeds.”
Among the biggest losers on Feb. 8 were HSBC, whose shares were down 3.5 percent. Commerzbank slumped 5.7 percent and BNP Paribas gave up 4.5 percent.
Meanwhile in Athens, the FTSEB index of financial stocks was down over 20 percent in midday trading. In addition to the general concerns about the banking sector in the eurozone, investors were worried about another dispute between the government and its EU-IMF creditors like one last year which wiped out the value of bank capital.