European stocks dive on Chinese data, mining woes


LONDON: European equities sank on Monday, as more disappointing Chinese data and downbeat broker comment weighed on the mining sector, with London-listed Glencore hit the hardest.

In late morning deals, London’s benchmark FTSE 100 index was down 1.25 percent at 6,032.30 points compared with Friday’s close.

In the eurozone, Frankfurt’s DAX 30 slid 1.47 percent to 9,545.90 points and the Paris CAC 40 shed 1.77 percent to 4,401.30.

In foreign exchange activity, the euro eased to $1.1195 from $1.1202 late on Friday in New York.

Europe’s markets sank as data showed China’s crucial industrial companies saw profits fall 8.8 percent in August — hit by last month’s shock yuan devaluation, weak demand and plunging share prices.

The result is the latest evidence of China’s economic weakening, after news last week that a gauge of factory activity in September had hit its lowest point in six-and-a-half years.

“Investors returning to the market with a renewed sense of confidence have had their bubble burst once again as Chinese economic data continues to disappoint,” said Mike McCudden, head of derivatives at online broker Interactive Investor.

In recent weeks and months, a growth slowdown in China has fuelled turmoil across world markets as the country is a key driver of the global economy.

Despite the poor data, Shanghai staged a recovery after a morning sell-off, ending 0.27 percent higher on Monday. Elsewhere in Asia, Tokyo rose 1.32 and Sydney added 1.42 percent. Hong Kong, Seoul and Taipei were closed for public holidays.

Glencore collapses
London’s top faller was mining giant Glencore, whose share price collapsed by almost a fifth after a gloomy broker warning.

Glencore shares nosedived 19.26 percent to 78.50 pence after Investec warned about the impact of low commodity prices on the group.

The company is grappling with tumbling commodity prices as China’s economic slowdown weighs on demand for raw materials.

“The challenging environment for mining companies leads us to the question of how much value will be left for equity holders if commodity prices do not improve,” Investec said in a research note to clients.

“If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate.”

Earlier this month, Glencore had raised $2.5 billion via a shares sale as part of its vast debt slashing plan.

In Monday morning deals in London, meanwhile, Anglo American stock dived 6.20 percent to 576.60 pence.

On the upside in London, shares in brewer SABMiller jumped 3.21 percent to 3,703 pence on reports that Belgian-Brazilian giant AB InBev was set to launch a formal takeover bid.

Shell stops Alaskan exploration
Royal Dutch Shell, meanwhile, saw its “B” shares drop 0.58 percent to 1,548 pence after the Anglo-Dutch energy giant halted its exploration in Alaska.

Shell said in a statement that its Burger J well in the Chukchi Sea, off the northwest coast of Alaska, had failed to find sufficient amounts of oil and gas.

The Anglo-Dutch group began drilling there in July, two months after US President Barack Obama approved Arctic drilling, despite fervent opposition from environmentalists.

Shell, which is also slashing its headcount by 6,500 this year owing to sliding oil prices, described its decision to pull out of Alaska as “disappointing” and warned it would take a major financial hit.

Vodafone stock meanwhile slumped four percent to 208.95 pence after it abandoned talks about an exchange of assets with US pay-TV giant Liberty Global.



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