Miners and banks weaker; Randgold off after reported coup in Mali
By Sara Sjolin, MarketWatch
A previous version of this story misstated the Chinese PMI reading. The story has been corrected.
LONDON (MarketWatch) — European stocks tumbled Thursday, led by banks and resource firms, after a fall in euro-zone purchasing managers indexes underlined recession worries and data showed a sharp slowdown in Chinese manufacturing activity.
The Stoxx Europe 600 index XX:SXXP -1.04% lost 1% to 265.98, set for a fourth straight day of losses.
The biggest decliner in the index, Randgold Resources Ltd. UK:RRS -9.93% sank 11.8% after a suspected military coup in Mali, where the company has operations.
Miners were among stocks that were hit the hardest after a preliminary reading of HSBC’s manufacturing purchasing managers’ index for March unexpectedly fell sharply as the rate of new orders at factories fell to a four-month low.
The index came in at 48.1, down from 49.6 in February, while employment recorded a three-year low. Readings below 50 indicate contraction.
“Today’s weak manufacturing PMI increases the likelihood of more substantial monetary easing in China. Another 50 basis point cut in the reserve requirement is imminent, and an interest rate cut is moving closer,” analysts at Danske Bank said in a note. “In our view, the manufacturing PMIs currently paints a picture of an economy mainly moving sideways with growth slightly below trend and so far with no signs that GDP growth is picking up.”
In London, Fresnillo PLC UK:FRES -5.87% fell 5.4%, Anglo American PLC AAUKY -2.38% UK:AAL -2.16% declined 2.5%, while heavyweight Rio Tinto PLC RIO -2.78% UK:RIO -2.58% was off 3%.
Oil firms were also lower as oil futures CLK2 -2.42% declined. BG Group PLC UK:BG -1.56% lost 1.3% and BP PLC UK:BP -0.74% BP -1.22% shed 0.8%.
The FTSE 100 index UK:UKX -0.61% traded 0.7% lower at 5,851.91, further weighed down by the banks. Royal Bank of Scotland Group PLC UK:RBS -2.44% RBS -2.87% gave up 2.7%, Lloyds Banking Group PLC UK:LLOY -2.48% LYG -3.22% fell 2%, while Barclays PLC UK:BARC -2.19% BCS -2.37% shed 2%.
The broader European banking sector was weaker as fresh business activity data spurred concerns about the euro-zone recovery. The Markit euro-zone purchasing managers’ composite output index fell to a three-month low of 48.7 in a preliminary reading for March, down from 49.3 in February.
“The question being asked is whether we will drop into a recession or not. Every time we see worse conditions, recession fears come back,” said Predrag Dukic, senior equity sales trader at CM Capital Markets in Madrid.
“Europe is on the edge right now, where we don’t know if we’ve pulled out of the crisis yet,” he added. “It really depends on global factors, meaning that we’ll have to see what happens with China and Asia and in the U.S. The euro zone can’t be looked at in an isolated way.”
In the U.S. macroeconomic data pointed in the opposite direction as initial jobless claims fell by 5,000 last week to 348,000, the lowest level since February 2008. U.S. stocks opened lower on Wall Street.
