European equities down on global growth fears

Eurostoxx 50: 2,414.97 (–82.86) Frankfurt DAX: 6,414.76 (–225.83) Paris CAC: 3,320.35 (–134.59)

EUROPEAN STOCKS retreated yesterday, with the Stoxx Europe 600 plunging to its lowest level in a year, amid deepening concern that the global recovery is stalling.

The Stoxx 600 sank 3.3 per cent to 243.56 in London for its biggest decline since May 2010.

The index has declined 16 per cent from this year’s high in February as the yield on Italian and Spanish bonds surged to records amid speculation that Europe will fail to contain its sovereign-debt crisis. The retreat has left the gauge trading at 9.9 times its companies’ estimated earnings, Bloomberg data show.

“The market is driven by macroeconomic fears,” said Stephane Ekolo, chief European strategist at Market Securities in London.

“There is no respite. The macro picture is leading market participants to start believing that issues such as sovereign debt, US debt and commodity prices will likely dent the economic recovery,” he said.

The European Central Bank left interest rates unchanged as economic growth slows and the region’s debt crisis spreads to Italy and Spain. ECB officials meeting in Frankfurt yesterday kept the benchmark rate at 1.5 per cent.

Xstrata plunged 8.5 per cent to 1,085p and Vedanta tumbled 9.4 per cent to 1,486p.

Rio Tinto slid 5.4 per cent to 3,796.5p after the mining company reported first-half net income of $7.6 billion. Analysts had expected earnings of $8.3 billion.

Veolia Environment tumbled 19 per cent to €11.60, the lowest price since its initial public offering in 2000, on concern that the world’s largest water company will cut payouts to shareholders following a first-half loss.

Inmarsat plunged 19 per cent to 394.5p, the biggest drop since its IPO in 2005.

Givaudan dropped 7.7 per cent to 760 Swiss francs. The maker of the fragrances for Marc Jacobs’s Lola and Paco Rabanne’s 1 Million perfumes reported first-half earnings that missed analyst estimates as higher raw-material costs hurt profitability.

Hexagon tumbled 15 per cent to 105.80 kroner. The world's biggest maker of measuring instruments posted second-quarter net income of €76.3 million. Analysts had estimated net income of €81.4 million, according to a Bloomberg survey. – (Bloomberg)