Stocks

European shares hit 1-week low as commodities stocks slump

Reuters London | Updated on January 20, 2018 Published on February 24, 2016

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European equities fell for a second straight session to a one-week low on Wednesday, with commodities-related shares coming under further selling pressure as the prices of copper and crude oil slipped.

The FTSEurofirst 300 index of top European shares was down 1.7 per cent at 1,266.13 points by 0930 GMT after falling to 1,265.20, the lowest level in a week. The benchmark index closed 1.3 per cent weaker in the previous session.

Commodities-focussed stocks bore the brunt of the sell-off, with the STOXX Europe 600 Basic Resources index dropping 4.5 per cent, the top sectoral decliner, after prices of copper fell as concerns about the demand in top consumer China resurfaced.

The European oil and gas index also fell 2.5 per cent, tracking a decline in crude oil prices which were hit after top exporter Saudi Arabia ruled out production cuts and industry data showed a further build in US crude stockpiles.

Shares in Anglo American, Glencore, BHP Billiton, BP and Royal Dutch Shell were down 2.4 to 7.0 per cent.

"The upside potential for commodity prices and commodity-related stocks is limited as there is still a lot of excess supply of commodities. It's not a good time to increase your exposure to the sector," said Peter Dixon, economist at Commerzbank.

Standard Chartered fell 6.4 per cent, extending the previous session's 6.7 per cent drop following an 84 per cent slump in its annual profit, as Bank of America ML, Deutsche Bank and Nomura cut their target prices for the stock.

Investors kept a close eye on the earnings season in Europe, which is gathering pace. According to Thomson Reuters StarMine data, 58 per cent companies in the STOXX Europe 600 index have announced results so far, of which 5 per cent have met or beaten analyst forecasts.

Shares in Wolters Kluwer rose 5.2 per cent, the top gainer in the FTSEurofirst 300 index, after the Dutch business information and publishing company reported slightly better-than-expected results as growth in North America and Asia Pacific offset weakness in Europe.

PSA Peugeot Citroen rose 3.9 per cent as the company said it would consider paying a dividend for 2016 after reaching its medium-term targets ahead of schedule, helped by cost cuts, price increases and a recovery in European demand.

Published on February 24, 2016
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