BLBG: Europe Stocks Fall as Outlook Concerns Outweigh German Sentiment
European stocks declined as concerns over the global economic outlook and U.S. interest rates outweighed a surprise increase in German business confidence.
Tullow Oil Plc and Seadrill Ltd. led a measure of energy stocks to among the worst performances of the 19 industry groups on the Stoxx Europe 600 Index. A gauge of auto-related companies posted the biggest gain for a second day, with Volkswagen AG jumping 6.6 percent and PSA Peugeot Citroen SA climbing 1.2 percent.
The Stoxx 600 fell 0.2 percent to 346.21 at 9:53 a.m. in London. Shares briefly rose as much as 0.3 percent after a report showed business confidence in Europe’s biggest economy improved in September as companies benefited from stronger domestic demand.
“The elephant in the room is China and rising interest rates -- you’ve got Yellen speaking tonight and there’s been a bit of confusion over what she said last week,” said Patrick Spencer, equities vice chairman at Robert W. Baird & Co. in London. “There’s been concern about whether low interest rates are the problem and not the solution. It’s sentiment driven at the moment.”
Equities have oscillated since the Federal Reserve held rates on Sept. 17, citing concerns about inflation and the impact of a slowdown in China. Fed Chair Janet Yellen speaks today and investors will be looking for any clarification of the central bank’s thinking. Odds of a hike at its next meeting in October are at 18 percent, according to Fed funds futures, while the probability of an increase at the December gathering is about 43 percent.
Shares ended yesterday little changed as investors set signs that the region’s economy is recovering against European Central Bank President Mario Draghi’s comments that the ECB needs time to consider if risks to the outlook warrant a step-up in stimulus.
