Miners lead European shares lower on China data
* French stocks fall after Moody’s warningBy Brian GormanLONDON, Oct 18 (Reuters) - European shares fell on Tuesday,
with miners among the biggest casualties after top metals
consumer China reported lower growth rates, while French stocks
underperformed following a warning from Moody’s about the
country’s credit rating.Strategists said a summit this weekend, which may result in
a plan to tackle the euro zone debt crisis, remained key to
market sentiment.Copper prices fell sharply, leading to weaker share prices
of miners, after China’s economic expansion slowed in the third
quarter to its weakest pace since early 2009 as euro-debt
strains and a sluggish U.S. economy took their toll.The STOXX Europe 600 Basic Resources Index fell 3
percent, and has lost more than 32 percent in 2011.”If China slows down, all other bets are off, though the
number was only slightly down but it’s clearly had a negative
impact on the market,” said Ian King head of international
equities at Legal & General, which has 356 billion pounds ($558
billion) under management.At 1116 GMT, the pan-European FTSEurofirst 300 index
was down 1 percent at 956.84 points, following a 1
percent fall on Monday after German Finance Minister Wolfgang
Schaeuble said it was unrealistic to expect a definitive
solution to the euro zone debt crisis at an European Union
summit this weekend.The benchmark is down more than 14 percent in 2011 on
worries about the euro zone crisis and weak growth but hit a
10-week high prior to Schaeuble’s comments, and is still up more
than 12 percent from a September low. L&G’s King said there was
scope for the rally to resume on news from the summit.”If politicians say they are committed to doing all they can
to bail out their neighbours, that they’re working on a plan to
recapitalise the banking sector and longer term we may even
consider harmonisation of fiscal policy, you would certainly see
a positive reaction in the markets.”France’s CAC 40 , down 1.8 percent, underperformed
the broader equity market after Moody’s said on Monday it may
slap a negative outlook on the country’s Aaa credit rating in
the next three months if the costs for helping to bail out banks
and other euro zone members stretch its budget too much.French Finance Minister Francois Baroin tried to play down
Moody’s warning saying the country’s rating was solid, but
investors were unconvinced and focused instead on his comments
on GDP growth. He said a growth target for next year would
probably have to be revised down.French banking stocks were lower, with heavyweight BNP
Paribas down 6.3 percent. A credit downgrade would
have “implications for funding costs”, King said.WEAK SENTIMENTInvestors were given fresh reminders about a weak
macroeconomic backdrop in Europe on Tuesday. German investor
sentiment fell to its lowest level in nearly three years in
October on uncertainty about the euro zone debt crisis.However, some analysts played down the significance of the
data.”The ‘real’ economy is moderating but not collapsing whilst
investors’ confidence is mainly driven by the unprecedented
crisis… (the impact of which) is difficult to predict,”
strategists at Newedge Group said in a note.
