European Markets Decline, Auto Stocks Weak

September 22, 2015

Paris (Sept 22)  The European markets were firmly in negative territory on Tuesday, led by auto stocks, after  Germany's  Volkswagen admitted to manipulating emission tests norms for diesel cars in the US Talks that the  European Central Bank  is preparing to scale up monetary stimulus did little to stem the decline.

On a light day for economic news,  UK  budget deficit exceeded expectations in August, data published by the  Office for National Statistics  showed. Public sector net borrowing excluding public sector banks increased by 1.4 billion pounds from last year to 12.1 billion pounds in August. It was forecast to rise to 9.2 billion pounds.

 Germany's  real wages advanced 2.7% in the second quarter from last year, which was the fastest growth since the series began in 2008. Wages increased 2.5% in the first quarter.

The Euro Stoxx 50 index of eurozone bluechip stocks declined 2.61%, while the Stoxx Europe 50 index, which includes some major  UK  companies, retreated 2.32%.

The German DAX and the French CAC 40 declined about 3% each and the  FTSE  100 index of the  UK  retreated 2%.  Switzerland's  SMI plunged 2.7%.

In  Frankfurt  , Volkswagen, which admitted to manipulating emission tests norms for diesel cars in the US, declined 5.4%.  BMW  declined 4.3% and Daimler dropped 3.7%. Continental slid 3.3%.

Volkswagen said it plans to set aside a provision of some  6.5 billion euros  to cover the necessary service measures and other efforts to win back the trust of its customers. The company's earnings targets for 2015 will be adjusted accordingly.

RWE and  E.ON  dropped 3.7% and 3%, respectively.

 Commerzbank  dropped 1.7% while  Deutsche Bank  was moderately lower.

In  Paris  ,  Renault  plunged 6% and  Peugeot  lost 7.2%. Auto parts maker  Valeo  fell 4%.

Lender  Societe Generale  declined 3.3%.  BNP Paribas  and  Credit Agricole  dropped 2.5% and 2.3%, respectively.

In  London  , miners were trading weak.  Glencore  plunged 8.6%, while  Antofagasta  and Anglo American dropped 6.3% each.  BHP Billiton  fell 4.1%.

Rolls Royce declined 2%, amid a regional rout for auto stocks.

 Mitchells & Butlers  , an operator of managed restaurants and pubs, fell 3.2%. The company expects fiscal 2015 results to show growth on last year although to be at the bottom end of the range of current market expectations.

Meanwhile,  RSA Insurance  gained 1.4%. The company plans to attract bids after  Zurich Insurance Group  said it does not intend to make an offer to acquire RSA.

In Zurich,  Roche  fell 3.2% and  Novartis  dropped 4%, as  Hillary Clinton  plans to propose today price limits as well as research-and-development spend guidelines for the pharmaceutical industry.

The Asian stocks closed a tad higher, as tentative signs of stability in global markets and market talk that the  European Central Bank  is preparing to scale up monetary stimulus helped offset worries over global growth.

In the US, futures point to a lower open on  Wall Street  . In the previous session, the Dow rose 0.8% and the S&P 500 added half a percent, while the tech-heavy Nasdaq inched up marginally.

Crude for November delivery lost  USD1.16  to  USD45.80  per barrel, while December gold dropped  USD3.8  to  USD1129.0  a troy ounce.

Source: AllianceNews

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