By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets ended mostly
lower on Monday after lackluster Chinese data spurred global growth
worries.
The Stoxx Europe 600 index slipped 0.1% to close at 295.22,
after rallying 1.3% on Friday. The index lost 1.8% last week.
"You had three consecutive down weeks and investors are weighing
up where to go from here," said Michael Hewson, senior market
analyst at CMC Markets in London.
"Based on fundamentals, there is really very little further
upside. The market was overvalued two to three weeks ago and I
still think we're overvalued. But if you think central banks will
continue to ease, there is more potential," he said.
In May, global stock markets jumped to multiyear highs, as
aggressive easing from central banks largely offset worries about
global growth. Markets started to pull back, however, on concerns
the U.S. Federal Reserve may soon begin to taper its massive bond
purchases.
Poor China data
Mining firms posted some of the biggest losses in the
pan-European index on Monday, after a poor set of economic data
from China released over the weekend. The data showed inflation
grew at a slower-than-expected pace in May, export growth slumped
unexpectedly and total social financing fell by about
one-third.
"Clearly such figures are a sharp reminder that China is still
struggling to recover from the global economic downturn and there
is still a way to go before investors' confidence in the economic
giant returns," said Shavaz Dhalla, a financial trader at Spreadex,
in a note.
Miners are sensitive to growth indications from China, as the
country is a major consumer of natural resources.
Shares of Anglo American PLC lost 2.8% in London, Rio Tinto PLC
dropped 2.4% and BHP Billiton PLC (BHP) slipped 1.4%.
Greek stocks posted sharp losses, after media reports said
Russian energy giant Gazprom withdrew its interest in Greece's
natural gas firm DEPA, stirring fears that the country's
privatization process could be derailed. A representative from
Gazprom declined to comment.
The Athex Composite slumped 4.7% to 939.78, with shares of
National Bank of Greece SA down 2.8%. Read: That hissing noise out
of Greece could mean trouble for the euro zone
Italy's FTSE MIB index slid 0.8% to 16,556.34, after data showed
the economy shrank 0.6% in the first quarter.
Read: Hollande calls off euro-zone crisis--but has he seen the
charts?
Japan provides support
Sentiment in Europe, however, found some support in good news
from Japan. The country's gross-domestic-product growth for the
first quarter was revised up to 4.1% annualized growth from the
original estimate of 3.5%. On a quarterly basis, GDP rose 1% in the
first three months of the year, better than the preliminary result
of 0.9%.
Asian stock markets were also supported by the latest take on
the U.S. labor-market recovery. On Friday, U.S. data showed that
175,000 jobs were added to the economy in May, beating market
expectations. But the data still appeared weak enough for the
Federal Reserve to continue its asset purchases at the current
pace. Fed Chairman Ben Bernanke last month said the central bank
could consider scaling back its easing program this summer if data
continue to improve.
"I don't think the Fed will taper this year, but the fact that
they are talking about it is making investors think twice before
jumping in with both feet," Hewson said.
"They [the Fed] want to taper QE, but the data is not allowing
them the flexibility to do so. There may come a point where QE just
isn't working anymore. It's like a drug--you get to a point where
it doesn't work anymore because the body is getting used to it," he
added.
At the European-market close, U.S. stocks traded higher on Wall
Street.
Movers
Germany's benchmark index stood out as one of the few bourses in
the black, buoyed by the upbeat Japanese data, Hewson said.
The DAX 30 index gained 0.6% to 8,307.69.
Shares of Volkswagen AG gained 1.1% after Citigroup lifted the
car maker to buy from neutral.
In London, shares of Severn Trent PLC slumped 6% after a
multinational consortium of funds said it will make no further
offers for the utility firm after its latest bid was rejected. The
consortium on Friday raised its offer for Severn Trent, in its
third attempt in less than a month to take the company private.
The U.K.'s FTSE 100 index fell 0.2% to 6,400.45.
France's CAC 40 index lost 0.2% to 3,864.36, with shares of
France Télécom down 1.7%. France Télécom's shareholders have voted
to change the company's name to Orange, its well-known brand, on
July 1.
Media reports said the company's chief executive, Stephane
Richard, has been held for questioning in France in relation to his
alleged role in a controversial payout to French businessman
Bernard Tapie in 2008. A spokesperson from Orange confirmed that
Richard had been detained, but said it is not an issue regarding
his future at the company.
Steelmaker ArcelorMittal SA lost 1% after Moody's Investors
Service said the outlook for the European steel industry will
remain negative over the next 12 to 18 months.
Outside the major indexes, shares of Nordea Bank AB fell 1.6%
after Goldman Sachs cut the firm to neutral from buy following its
recent rally.
Zurich Insurance Group AG lost 1% after J.P. Morgan Cazenove cut
the firm to underweight from neutral.
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