European shares fell to their lowest level in more than two months on Thursday, mirroring losses in Wall Street and Asia, with a stronger euro following a global bond rout and concerns about the outcome of the British election hitting sentiment.

Britain’s FTSE 100 index fell 0.8 per cent on the day of an election that could yield a weak government, propel it towards a vote on EU membership and foster Scottish secession.

Prime Minister David Cameron’s Conservatives and Ed Miliband’s Opposition Labour Party have been neck and neck in opinion polls for months, indicating neither will win enough seats for an outright majority in the 650-seat Parliament.

By 0757 GMT, the pan-European FTSEurofirst 300 index was down 1 per cent at 1,532.61 points after falling to its lowest since late February. US shares fell about 0.5 per cent on Wednesday, while Japan’s Nikkei dropped 1.2 per cent on Thursday.

Analysts said the euro’s resilience, a negative factor for export-oriented European firms, was weighing on the sentiment. The euro hit a two-month high, still pulling away from March’s 12-year trough.

“The dollar has broken some important resistance lines and this is definitely a burdening factor for European equities as the correlation between the US currency and European equities is extremely high,’’ UniCredit strategist Christian Stocker said.

“From a sectoral point of view, this is important and definitely negative for cyclical sectors such as automobiles and industrials.’’

Among individual sharp movers, Metro fell 6.2 per cent to be the top decliner in the FTSEurofirst 300 index after German investment group Haniel said it had successfully placed 16.25 million shares in the retailer.

Morrisons slipped 6.8 per cent to be the biggest faller in the FTSE 100 after Britain’s No. 4 grocer posted a further deterioration in underlying sales, illustrating the tough turnaround task facing its new boss.

“The challenge ahead for the new chief executive is significant. The improving trend in like-for-like sales over recent quarters has ended, with the latest industry data reporting ongoing growth for the discounters - Aldi and Lidl,’’ Hargreaves Lansdown equity analyst Keith Bowman said.

Swiss staffing firm Adecco fell 5.6 per cent after both its chief executive and chief financial officer decided to leave, casting a cloud over its future as it posted record first-quarter results.

Germany’s Beiersdorf, however, bucked the trend and rose 4.4 per cent after reporting a bigger-than-expected rise in first-quarter core profit, helped by demand for its products in Eastern Europe.

HeidelbergCement gained 4.6 per cent following a rise in core first-quarter earnings of 29 per cent on the back of a construction industry recovery in North America and Britain.

Related Topics
comment COMMENT NOW