Autos drag bourses south; China hike adds to pressure
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stock markets were weaker on Monday in thin, volatile trading, with investors taking a cue from losses in Asia after the weekend rate hike from China.
The Stoxx Europe 600 index (ST:STOXX600 279.48, -1.95, -0.69%) fell 0.5% to 280. Most markets in Europe were closed on Friday ahead of Christmas. London markets will be closed until Wednesday.
In focus for Monday was the quarter-point hike in China’s key lending and deposit rates, the second time it has increased in 10 weeks.
Some analysts said the hike could mean Beijing officials’ efforts to slow the economy in 2010 have had only a limited impact and now they were stepping up those efforts. See China’s hike signals no more soft touch
China stocks at first seemed to take the hike in stride, moving higher, but then gave up the gains and turned sharply south, with the Shanghai Composite losing nearly 2%. U.S. stock futures indicated losses were looming for Wall Street as investors returned from the Christmas weekend.
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In Europe, with no corporate or economic news to focus on, markets followed Asia’s lead. Volumes remained thin with many traders still away and markets volatile with London out of action.
The German DAX 30 index (DX:DAX 6,969, -88.89, -1.26%) was among European indexes showing the biggest losses, down 1.6% to 6,946.14. Auto stocks, a heavy presence for the DAX, were in the red, with BMW AG (DE:BMW 60.29, -3.01, -4.76%) down nearly 5%, Volkswagen AG (DE:VOW3 122.08, -6.07, -4.74%) off 4.8% and Daimler AG (DE:DAI 52.05, -2.06, -3.81%) down 4.1%.
Likewise in Paris, where the CAC 40 index (FR:PX1 3,856, -44.12, -1.13%) fell 1.4% to 3,844.78, Peugeot SA (FR:UG 28.93, -0.52, -1.75%) fell 2.1%.
Banks were also weaker, with Societe Generale SA (FR:GLE 41.38, -0.76, -1.80%) down 2.1%, and steelmaker ArcelorMittal SA (NL:MT 28.45, +0.08, +0.28%) gave up 1.9%.
Among peripheral markets, the Spanish IBEX 35 index (XX:IBEX 9,979, -128.10, -1.27%) dropped 1.5% to 9,947, with market heavyweight Banco Santander SA (STD 10.64, -0.15, -1.39%) (ES:SAN 7.96, -0.17, -2.13%) down 1.6% and building group Sacyr-Vallehermoso SA (ES:SYV 4.37, -0.16, -3.60%) 2.3% lower.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
