Europe close: Equities slide on China, Greek concerns

European equities declined on Monday following a slump in Asia, hurt by disappointing data.

Chinese industrial profits fell 0.3% year-on-year in June, a report showed. The figures came after Friday’s weak manufacturing data, fuelling concerns of a slowdown in the world’s second largest economy.

“European shares are starting the new trading week on a negative note as Chinese shares are getting hit hard again,” said Markus Huber, senior analyst at Peregrine & Black.

“Concerns regarding another slowdown of the Chinese economy are hurting investors’ confidence. With China becoming ever more important especially for European exporters any signs of a weakening economy are very likely to negatively impact growth of countries like Germany who rely heavily on exports.”

Meanwhile, Greek bailout talks were reportedly delayed further until later in the week after being put on hold on Friday.

Greek government spokeswoman Olga Gerovasili said that senior negotiating staff would only arrive in Athens on Thursday or later.

“With the 20 August repayment to the European Central Bank looming, the timing of a deal is becoming increasingly pertinent; if no deal can be reached by this date, several Eurozone countries may oppose the second bridge loan (as we discussed last week) which is currently factored into the bail-out deal, allowing Greece to meet their August repayments,” said Royal Bank of Scotland analysts.

On a positive note for Europe, German business confidence rose in July.The IFO Institute’s business confidence index for July printed at 108.0, ahead of the previous month’s reading of 10.7 and expectations for 107.2.

Stateside, US durable goods orders climbed 3.4% in June compared to a 2.1% fall a month earlier and analysts’ forecasts for a 3.2% increase.

The market is now looking ahead to the Federal Reserve’s Open Market Committee meeting that kicks off on Tuesday and Wednesday, culminating in a rate decision.

Although no change in rates is expected until at least September, all eyes will be on the Fed’s guidance for any further clues on the timing of a rate hike.

Company-wise UBS slipped into the red despite the Swiss bank, which reported a day early, posting better-than-expected second-quarter profit.

Budget carrier Ryanair was also under pressure after its first-quarter results. Although it posted a 25% jump in profit and said full-year results will be at the top end of its guidance range, the company warned that over-capacity could weigh on average fares.

Publisher Pearson, which was in the spotlight last week after confirming the sale of FT Group to Nikkei for £844m, was also on the back foot after saying it was in discussions regarding the sale of its 50% stake in The Economist.

Shares in Reckitt Benckiser bucked the trend, trading up after the consumer goods company raised its like-for-like revenue growth target for the full year and posted a jump in first-half pre-tax profit amid broad-based growth across its businesses.

Philips was also in the black after it posted a 13% rise in second-quarter net profit.