MW: European stocks lose traction as growth worries persist
European stocks turned lower Tuesday, with investors still cautious as worries about global economic growth linger ahead of the key U.S. interest-rate decision.
The Stoxx Europe 600 SXXP, +0.27% lost 0.4% to 352.24, with only the technology, health care and consumer goods groups making modest gains. The pan-European index had been up by as much as 0.5% during the session.
“Essentially, traders are looking for a good reason to buy stocks, and the problem is the lack of positive news,” said David Madden, market analyst at IG . “Traders are still mindful that the Far East is slowing down ... and that’s weighing on sentiment.”
China in Europe’s sight line: In Asian trading, the Shanghai Composite Index SHCOMP, -3.52% fell 3.5%, adding to its nearly 3% drop on Monday. The week started with dreary Chinese economic data, as monthly factory output and fixed-asset investment missed expectations.
Concerns about economic conditions in China and other emerging markets showed up in a key German economic sentiment survey, released Tuesday. The ZEW think tank’s indicator of economic expectations for September fell to a 10-month low.
Investors are waiting for Thursday’s rate decision from the U.S. Federal Reserve. They will watch for any Fed comment on whether slowing in China’s economy and recent market volatility played a role in its decision.
Commodities pain: The basic materials sector was among the worst performing Tuesday. Miner and commodities trader Glencore PLC GLEN, -4.50% slid 5.4%. The stock had jumped roughly 9% last week after the company outlined cost-cutting plans.
“Glencore [is] back to its usual habit of dropping to all-time lows, despite the debt restructuring,” said Brenda Kelly, head analyst at London Capital Group, in emailed comments.
Glencore’s drop weighed on the U.K.’s FTSE 100 UKX, -0.11% The index turned lower, losing 0.6% at 6,049.05.
Economic data: The eurozone’s trade surplus widened in July to hit its highest level since at least 2004, an indication that the weaker euro has been boosting exports and dampening imports.
On Tuesday, official figures showed the rate of annual inflation in the U.K. fell back to zero in August due to cheaper fuel, erasing a small rise in July.
Other benchmarks: France’s CAC 40 PX1, +0.09% lost 0.1% to 4,517.57. In Frankfurt, Germany’s DAX 30 DAX, +0.38% was down 0.5% to 10,086.23, pressured by losses of more than 7% each in utilities RWE AG RWE, -7.15% and E.ON SE EOAN, -8.43%
