MW: Europe stocks drop as banks, miners edge lower
Auto makers pull back after China raises gas prices
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets traded mostly lower on Tuesday, with banks down and miners weighing on the indexes amid concerns about Chinese economic growth. Auto makers were off after China increased gasoline prices.
The Stoxx Europe 600 index XX:SXXP -1.21% dropped 1.2% to 268.77.
“I see some profit-taking after we had a really good rally since the Greek deal last week,” said Peter Dixon, strategist at Commerzbank in London. “The bad news seem to be behind us and there is scope for the market to rise further over the next couple of weeks.”
“But my concern is that the recent rally occurred on the back of low volume and we only get confidence about the strength of the rally if the volume returns,” he added.
Miners were among biggest decliners in the index after BHP Billiton PLC UK:BLT -3.76% said Chinese demand for iron ore will flatten out. The comments were made by Ian Ashby, president of BHP’s iron-ore division, speaking to reporters in Australia.
Heavyweights BHP Billiton and Rio Tinto PLC UK:RIO -4.15% RIO -3.50% declined 3.8% and 4.2% respectively. Vedanta Resources PLC UK:VED -4.44% gave up 4.7% and Antofagasta PLC UK:ANTO -3.69% shed 3.6%.
Glencore International PLC UK:GLEN -2.28% retreated 2.2%. The mining firm definitely agreed to buy Canadian grain trader Viterra Inc. AU:VTA -1.31% CA:VT -0.44% for C$16.25 ($16.38) a share.
The U.K. FTSE 100 index UK:UKX -1.27% traded 1.2% lower at 5,887.49, also hurt by banks. HSBC Holdings PLC UK:HSBA -1.94% HBC -1.68% was off 1.8%, Barclays PLC UK:BARC -2.26% BCS -1.68% lost 2.2% and Royal Bank of Scotland Group PLC UK:RBS -2.26% RBS -1.72% fell 2.1%.
Losses were extended after U.K. inflation tumbled to a 15-month low in February, pushed down by lower energy prices and discounting by retailers. Consumer-price inflation fell to an annual rate of 3.4% in February from 3.6% in January.
`Hard-pressed consumers’
“Further falls are likely in coming months, as retailers continue to struggle to attract hard-pressed consumers, although high oil prices mean the Bank of England’s expectation that inflation will drop below its 2% target by the end of the year could prove too optimistic,” said Chris Williamson, chief economist at Markit, in a note.
Macroeconomic data also added pressure in the U.S. where most stocks opened lower after data showed housing starts fell 1.1% in February to an annual rate of 698,000. Read more about U.S. housing starts
In Frankfurt, Deutsche Bank AG DE:DBK -1.62% shed 1.8% and Commerzbank AG declined 2.6%, adding pressure to the DAX 30 index DX:DAX -1.42% , which traded 1.4% lower at 7,054.51.
Siemens AG DE:SIE -1.13% declined 1.3%. The industrial conglomerate said it is acquiring a unit of Scottish oil service business Expro Holdings UK for about 470 million euros ($620 million)
Cars
Auto makers weighed most heavily on the index, however, after China raised gasoline prices 6.4% and diesel prices 7%, spurring concerns about car demand.
Daimler AG DE:DAI -4.56% gave up 4.5%, BMW AG DE:BMW -5.35% dropped 5% and Volkswagen AG DE:VOW -5.27% declined 5.3%. Outside the main index, Porsche Automobil Holding SE DE:PAH3 -3.99% fell 3.5%.
“The signs of an economic slowdown are there for China; increasing fuel prices again and a reduction in metals demand could be both a sign of a manufacturing reduction to come, and one that is here already,” said Jonathan Bristow, broker at Valbury Capital, in a note.
Lending support in Frankfurt, Metro AG DE:MEO +1.90% rose 1.9% as 2011 earnings met analysts’ expectations and the retailer said it expects higher sales in 2012.
French car makers were lower and Peugeot SA FR:UG -4.65% shed 4.8%, while Renault SA FR:RNO -3.83% traded 3.3% lower. Tire maker Michelin FR:ML -1.70% fell 1.6%.
The French CAC 40 index FR:PX1 -1.33% was off 1.3% at 3,530.59. Banks also added pressure: Societe Generale SA FR:GLE -2.21% lost 2.4%, BNP Paribas SA FR:BNP -1.73% shed 2% and Credit Agricole SA FR:ACA -1.48% was 1.6% lower.
Steelmaker ArcelorMittal SA FR:MT -2.41% fell 3.6% as Citigroup said it expects crude-steel production to grow 3.6% year-on-year in 2012, which is half the rate of 2011.
Oil group Total SA FR:FP -1.47% fell 1.3% as oil prices moved lower.
Elsewhere, Finnish Kone Oyj FI:KNEBV -3.96% declined 4% after Citigroup initiated coverage of the engineering and construction firm with a sell rating.
