Aer Lingus shares jump after Ryanair makes fresh bid for airline
LONDON (MarketWatch) -- European shares started December on a downbeat note Monday with more glum news on the economy souring sentiment towards stocks.
The pan-European Dow Jones Stoxx 600 index fell 3.4% to 199.28, giving back some of last week's strong gains.
Investors hoping for a rally to end a dismal year in stocks might have been disappointed on Monday as every sector of the Stoxx 600 traded in the red.
Miners were the worst performers in percentage terms as shares of Rio Tinto fell 3%, shares of BHP Billiton declined 3.6% and shares in Anglo American dropped 8.5%.
Banks and oil producers were the worst performers in terms of contribution. Eni shares fell 3.8% and UBS shares dropped 7.5%.
Data on manufacturing helped set the tone for the session, with a gauge of China's manufacturing activity contracting at a record rate in November, the purchasing managers index for U.K. manufacturing falling to a record low and euro-zone manufacturing PMI also dropping to an all-time low.
"The [euro-zone] headline index plunged to 35.6 in November from 41.1, with new orders at just 28.8, a staggeringly low reading consistent with a 20% year-on-year decline in 'hard' orders data," said economists at BNP Paribas.
Portfolio strategists at Citigroup said that macroeconomic indicators suggest life is likely to get even tougher for European companies. "We expect 2009 earnings to fall in the region of 30%," they said.
On a national level, the U.K. FTSE 100 index fell 2.2% to 4,192.62, the German DAX 30 index dropped 3.2% to 4,521.58 and the French CAC-40 index fell 2.5% to 3,182.54.
U.S. stock futures were pointing to a lower start on Wall Street, after shares also rallied sharply last week. Also out on Monday will be the U.S. Institute of Supply Manufacturing gauge on manufacturing activity in November. See Indications.
Autos lower
Autos were also under pressure with shares of Renault , down 4.9% and Peugeot , down 5.1%. Data showed that French car registrations fell 14% in November, compared to the same point a year ago.
Analysts at SES Research said that earnings out this week from chip maker Infineon Technologies could show the first impact of declining automotive demand.
They downgraded the firm to hold from buy ahead of the results due Dec. 3.
Earlier, Infineon shares outperformed the broader market after it said that its Qimonda unit expects to report that its fiscal fourth-quarter net loss widened from the third quarter but might also announce a deal with strategic and financial investors in the next few weeks.
Still, it wasn't all gloom. Shares in Irish airline Aer Lingus jumped 14.3% to 1.28 euros in Dublin after Ryanair Holdings announced a fresh bid for the airline at 1.40 euros a share.
Ryanair previously failed to buy Aer Lingus after rejections from both the company and regulators. Shares fell 2.1% in Dublin. See full story.
Shares in Spanish real estate developer Sacyr Vallehermoso jumped 3.2% in Madrid.
The firm agreed to sell its toll road operating firm Itinere Infraestructuras to a Citigroup ) fund for 7.9 billion euros ($10.2 billion). Itinere Infraestructuras shares climbed 12.5%.
