Europe close: Stocks slump as concerns over China slowdown return

European equity markets declined on Tuesday as disappointing trade figures from China offset a more buoyant reading on Eurozone growth.

The benchmark Stoxx Europe 600 index closed down 1.80%, while France’s CAC 40 fell 1.57% and Germany’s DAX lost 1.95%.

“There were warning signs that markets could be set for another selloff even before the ECB took the stage on Thursday, and with the DAX down over 200 points today, anxiety is clearly rife that it may not be such a merry Christmas for stock market investors,” said IG’s market analyst Joshua Mahony.

As of 1640 GMT, the euro was broadly flat against the yen but gained 0.72% and 0.40% against the pound and the dollar respectively, while Brent crude slid 0.02% to $40.72 a barrel, falling below the $41 benchmark for the first time since February 2009.

“Even though most industries stand to benefit from lower oil prices, when the price collapses, it sends a signal of lower global demand and that is weighing on sentiment in equity markets,” said CMC Markets’ analyst Jasper Lawler.

“The complete failure of OPEC as a force to influence global oil supply has come just at a time when the dollar has been at its strongest in months ahead of a widely anticipated rate hike.”

Eurozone GDP in line with expectations

On the macroeconomic front, figures released from Eurostat showed gross domestic product in the Eurozone grew 0.3% quarter-on-quarter in the three months to September, in line with analysts’ expectations.

Meanwhile, investors also digested Chinese trade figures, which revealed an ongoing weak performance. Exports fell 6.8%, their fifth straight month of decline and a sharper drop than expected, while imports were down 8.7%, which wasn’t quite as bad as expected.

The overall trade surplus came in at 343 billion yuan or $53bn.

“Chinese export numbers fell sharply to post -6.8% instead of the -5% that was expected,” said James Hughes, chief market analyst at GKFX.

“This has spooked the market a little but nowhere near as much as negative China data would have done prior to us being a little more certain about the Fed’s next decision.”

In company news, French advertising company Publicis slid 2.18%, with traders pointing to a Financial Times report that it has lost some US accounts with Procter & Gamble.

Air France-KLM fell 1.48% after it said the Paris terror attacks cost it €50m in lost revenue in November.

On the upside, French conglomerate Bouygues rose 1.21% following a media report that Orange is in talks to buy some of its assets.