Forexpros – European stock markets extended losses on Monday, as weak euro zone economic data and signs of a contraction in Chinese manufacturing activity continued to weigh on sentiment.
During European afternoon trade, the EURO STOXX 50 tumbled 2.37%, France’s CAC 40 plummeted 2.30%, while Germany’s DAX 30 plunged 2.73%.
Data showed earlier that manufacturing activity in Germany slowed to the lowest level in almost three years in April, adding to concerns over the economic outlook of the euro zone’s largest economy.
A separate report showed that manufacturing activity in the euro zone deteriorated in April, growing at the slowest pace since June 2009, while service sector activity declined to the lowest level in five months in April.
Meanwhile, markets were also jittery after a preliminary report showed that manufacturing activity in China remained in contraction territory in April for the sixth consecutive month.
The data overshadowed news on Friday that the Group of 20 leading economies agreed to boost the International Monetary Fund’s lending capacity by USD430 billion, to help shield the global economy from the debt crisis roiling the euro zone.
Financial stocks were broadly lower, led by Dutch lender ING Group, down 7.04% after Holland’s Prime Minister Mark Rutte failed to reach an agreement with one of the parties in his coalition over austerity measures.
France’s BNP Paribas and Societe Generale also saw shares drop 4.07% and 4.16%, while German lenders Deutsche Bank and Commerzbank retreated 4% and 5.26% respectively.
Deutsche Bank, Germany’s largest lender, was also slated to book an additional charge of as much as EUR400 million euros tied to the sale of Actavis Group hf.
On the upside, Danone gained 2.25% after Nestle SA agreed to buy Pfizer Inc.’s baby-food unit for USD11.9 billion, edging out the French company in a contest for a business that gets most of its sales in emerging markets.
In London, commodity-heavy FTSE 100 lost 1.75%, weighed by strong losses in mining stocks.
Shares in Rio Tinto plunged 3.53% and Bhp Billiton tumbled 2.97%, while copper producers Xstrata and Kazakhmys dropped 2.12% and 3.91% respectively.
Financial stocks also remained on the downside, as U.K. lenders tracked their European counterparts sharply lower. Barclays saw shares decline 3.38% and the Royal Bank of Scotland slid 3.25%, while shares in Lloyds Banking and HSBC Holdings dropped 2.46% and 2.24%.
Elsewhere, Cable & Wireless Worldwide skyrocketed 15.47% after Vodafone, the world’s largest wireless operator, agreed to buy the U.K. company, offering 38 pence a share.
Vodafone, whose shares added 0.76% after the news, became the sole bidder after India’s Tata Communications Ltd. last week failed to agree on a price and decided against making an offer.
In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to fall of 0.98%, S&P 500 futures signaled a 1.04% decline, while the Nasdaq 100 futures indicated a 0.96% loss.
Sentiment also came under pressure amid uncertainty over the result of France’s presidential election, after President Sarkozy performed poorly against challenger Francois Hollande in the first round of the vote.
Hollande has said he wants to renegotiate the euro zone fiscal pact in order to stimulate growth in the euro zone, rather than enforcing strict austerity measures.
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