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EUROPE MARKETS: European Stocks Head For Worst Week In 2 Years As Global Selloff Rages On

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02/09/2018 | 11:26am CEST

By Sara Sjolin, MarketWatch

1,000-point drop for U.S.'s Dow drags on investing mood

European stock were slammed again on Friday, tracking a renewed plunge on Wall Street that yanked both the S&P 500 index and Dow average into correction territory on Thursday.

What are markets doing?

The Stoxx Europe 600 index fell 0.5% to 372.05, building on a 1.6% loss from Thursday . The pan-European benchmark is now on track for a 4.1% weekly loss, which would be its biggest since February 2016.

Germany's DAX 30 index dropped 0.4% to 12,210.56, paring back from an intraday low of 12,194.89, which saw the benchmark briefly slide into a correction. A correction is usually defined as a pullback from a recent peak of least 10%.

France's CAC 40 index dropped 0.5% to 5,125.76, and the U.K.'s FTSE 100 index gave up 0.5% to 7,136.03 .

The euro rose to $1.2268, up from $1.2249 late Thursday in New York.

What is driving the market?

The weakness in Europe came after equities on Wall Street suffered another plunge on Thursday, with the Dow Jones Industrial Average tumbling more than 1,000 points . That was the second time this week the U.S. blue chip index logged a four-digit slide, having plunged 1,175 points on Monday when the selloff set in.

The U.S. slump on Friday also continued into Asian stock markets, which wrapped up their worst week in years . Chinese stocks were hammered, with the Shanghai Composite Index sliding 4.1%.

Seen as driving the action were concerns over rising volatility and worries that faster-than-expected inflation could lead to more Federal Reserve interest-rate hikes this year than expected. Analysts have also noted that stocks globally were due for a pullback after scoring big gains in 2017 and in January.

Political factors may also drive sentiment, as investors waited for a key vote to lift the partial U.S. government shutdown, which came into effect Friday morning after a midnight deadline was missed. The Senate on Friday morning passed a two-year budget deal , sending the bill to the House to approve.

What are analysts saying?

"It would appear that the brief respite for stocks seen in the middle of the week turned out to be the eye of the storm, as once again rising bond yields prompted a further bout of selling across the board, not only in the U.S. last night but in Asia again this morning," said Michael Hewson, chief market analyst at CMC Markets UK, in a note.

"Concerns about rising interest rates weren't helped by an unexpectedly hawkish inflation report from the Bank of England yesterday, while the latest Chinese trade data suggested that the Chinese economy appeared to be ticking along nicely, even if the trade surplus did shrink quite sharply as a result of a big jump in import," he added.

Which stocks are in focus?

Shares of A.P. Moeller-Maersk AS (MAERSK-B.KO) lost 1.7% after the Danish shipping company reported fourth-quarter profit below analyst forecasts .

Banks, which have been among hardest hit stocks in the selloff, continued their slump on Friday. The Stoxx 600 Banks Index fell 1.2%, deepening its weekly loss to 4.1%.

On an upbeat note, shares of L'Oréal SA (OR.FR) climbed 0.9% after the French cosmetics group posted fourth-quarter sales that blast past expectations.

Economic news

French industrial production rose slightly more-than-expected in December, climbing 0.5%. Meanwhile, in the U.K. industrial production fell 1.3% in December due to an emergency shutdown of a major North Sea pipeline.

Stocks mentioned in the article
ChangeLast1st jan.
CAC 40 0.41% 5637.51 Real-time Quote.5.68%
CHINA-SHANGHAI COMP 0.66% 3214.36 End-of-day quote.-3.01%
DAX -0.28% 13077.72 Delayed Quote.1.24%
DJ INDUSTRIAL 1.06% 24975.39 Delayed Quote.-0.02%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.-5.90%
NASDAQ 100 0.22% 6881.7826 Delayed Quote.7.35%
NASDAQ COMP. 0.24% 7372.3334 Delayed Quote.6.53%
S&P 500 -0.26% 2712.98 Real-time Quote.1.47%
STOXX EUR 600(P)-EUR 0.30% 395.87 End-of-day quote.1.73%
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