European shares drop to five-week low

FE Team | Published: October 03, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

LONDON/PARIS, Oct 2 (Reuters): European stocks slipped for a second straight session on Thursday, with a benchmark share index hitting a five-week low as growth worries persisted after soft manufacturing data from Asia and Europe.
By 1023 GMT, the FTSEurofirst 300 index of top European shares was down 0.5 per cent at 1,360.15 points, having lost 0.9 per cent on Wednesday.
The pan-European index, which is still up about 3 per cent this year, has fallen 3.6 per cent over the past two weeks, dragged down by a flurry of sales and profit warnings as well as by growing concerns over the timing of the US Federal Reserve's expected interest rate hike next year.
"All eyes are on the S&P 500 and whether or not it's entering a bearish trend. If we get a 'sell' signal on the index, then we're set for a serious correction, but it's too early to say if this is what's going to happen," Aurel BGC chartist Gerard Sagnier said.
Traders were keen for details on the European Central Bank's new asset-buying plan, due later on Thursday, which the ECB hopes will prop up inflation and revive the euro zone economy.
The bank plans to buy asset-backed securities (ABS), packages of reparcelled loans, with a view to spurring the market for such credit and supporting lending to the small- and mid-sized firms that form the backbone of the euro zone economy.
A Reuters poll on Monday showed money market traders on average expect the ECB to buy a total of 200 billion euros of ABS and covered bonds over a year.
"If the ECB goes all in on the asset-backed securities purchase programme, it will likely be a major positive catalyst for European banks as (it) will suddenly create a liquid market for ABS and thus allow banks to transfer risk off their balance sheet and free up capacity for new lending," Saxo Bank's head of equity strategy, Peter Garnry, said in a note.
Around Europe, UK's FTSE 100 index was down 0.3 per cent, Germany's DAX index fell 0.2 per cent, while France's CAC 40 was down 0.2 per cent.
The retreat was sharper in southern Europe, with Spain's IBEX down 0.6 per cent, Italy's MIB down 0.9 per cent and Portugal's PSI 20 down 1.6 per cent.
Among other big movers, rig firm Seadrill fell 4.7 per cent, the biggest decliner in the FTSEurofirst 300 index, tracking a drop in shares of its peers that have taken a beating on lower oil prices, cutbacks in capex and an abundance of new rigs on the market. Oil prices fell 2.3 per cent to a more than two-year low on Thursday.
Shares in Fiat-Chrysler bucked the trend, rising 1.4 per cent. The group reiterated on Thursday a tax agreement granted by Luxembourg to one of its subsidiaries was legitimate and said the potential financial impact of a European Commission probe into the matter would not be significant.