MW: European stocks drop further, heading for sharp weekly loss
European stocks dropped sharply Friday, pulling lower along with other global markets, with traders attributing the moves to a change in Chinese trading rules.
European equity indexes, as well as U.S. stock futures, began hitting intraday lows in the wake of heavy selling in futures of so-called H shares on Hong Kong’s Hang Seng Index HSI, -0.31% H-shares are Chinese stocks listed in Hong Kong. The plunge coincided with news that a Chinese regulator is now allowing fund managers to lend stocks for short selling, which will boost the supply of shares.
“This is apparently weighing heavily on Chinese index futures, which is dragging equities lower across the board. Europe is getting battered now as well,” said Craig Erlam, senior market analyst OANDA. Futures of H-shares were down 5%.
The Stoxx Europe 600 SXXP, -1.31% had been slightly lower earlier in the session, but losses accelerated in late-morning trade, pushing the index down 1.5% to 404.70. The pan-European benchmark was on track for a weekly decline of 2%. That move would follow two weeks of gains.
Germany’s DAX 30 DAX, -1.74% was shoved down 1.9% to 11,771.53. The DAX is now facing at weekly slide of 4.9%. Meanwhile, the yield on the 10-year German bond slipped 3 basis points to 0.6%.
France’s CAC 40 PX1, -1.25% fell 1.3% to 5,154.65. The U.K.’s FTSE 100 UKX, -0.84% turned lower, losing 0.9% to 6,993.34.
Greece’s Athex Composite GD, -1.22% also turned lower, by 1.2% to 743.47.
Read: Signs the market is girding for a Greek default, in 4 charts
There have been no signs of progress in negotiations over Greece’s bailout, suggesting the two sides won’t strike an agreement regarding Greek economic reforms before the April 24 Eurogroup meeting.
Read: Schaeuble, Varoufakis see little common ground on Greek aid
Meanwhile, the pound GBPUSD, +0.67% held to higher ground, rising to $1.5019, according to FactSet data, after data from the Office for National Statistics showed average weekly pay rose 1.7% in February. The jobless rate fell to 5.6%, from 5.7%, the lowest level since mid-2008.
