European shares sink to lowest in more than two years

European shares closed at their lowest level in more than two years yesterday with investor concerns over the health of the region’s banks compounding worries over slowing global growth.

The pan-European FTSEurofirst 300 index closed down 3.4 per cent at 1,239.68 points, its lowest since October 2013. The STOXX Europe 600 banking index fell 5.6 per cent, making it the top sectoral faller.

In Ireland, the Iseq Overall index fell by 5.4 per cent to 5,749.94, its lowest level since August 24th, 2010.

DUBLIN

Irish shares were routed across the board.

CRH

finished 8 per cent lower at €21.14, mirroring weakness across the building materials sector globally. Cavan-based construction stock

Kingspan

was another standout loser on the day, down 10 per cent at €19.31.

Bank of Ireland was also down 10 per cent at 25.5 cent while Permanent TSB finished 9.4 per cent lower at €3.308. Ironically, AIB's shares finished 3.7 per cent higher but this is a meaningless indicator as the company is more than 99 per cent owned by the State and there is no trading in the shares by institutions.

Travel groups Ryanair and Irish Continental Group both dropped by 5 per cent while bookmaker Paddy Power Betfair shed 5.7 per cent to close at €121.90.

LONDON

UK stocks tumbled in line with global equities, with almost all FTSE 100 Index members retreating. More than 90 of its shares dropped, mirroring declines in European equities amid continued volatility in oil.

Rolls-Royce lost 2.7 per cent after a report that it will cut its dividend.

Randgold Resources jumped 13 per cent to a three-year high. Anglo American and Rio Tinto also gained as UK miners bucked the trend to advance for a fourth day.

The benchmark gauge for UK stocks has fallen 8.9 per cent this year, less than the regional Stoxx Europe 600 Index. The broader FTSE All-Share Index lost 2.7 per cent on Monday.

EUROPE

On a difficult day for banking stocks across Europe,

Deutsche Bank

fell 9.5 per cent, leading decliners on Europe’s Stoxx 50 index. Also in the sector,

BNP Paribas, ING Santander

and

Barclays

all fell by more than 5 per cent.

“Investors are starting to think that banks are not as solid as previously thought,“ said Giuseppe Sersale, fund manager at Italy‘s Anthilia Capital. He added the negative sentiment was compounded by signs of a US economic slowdown, persistent worries about China, and continued volatility in oil prices.

The cost of insuring the European financial sector’s senior debt against default climbed to its highest level since late 2013.

The Athens stock index fell 7.9 per cent to its lowest level since at least 1991 due to uncertainty that a bailout review by the country‘s lenders could drag on.

Energy stocks also lost ground, with the European oil and gas index falling by 2.8 per cent after crude oil prices slipped again as supply overhang concerns grew.

NEW YORK

Wall Street sank sharply as financial stocks sold off amid worries about interest rates and investors backed off from richly valued tech and consumer stocks amid persistent fears of a global slowdown.

The technology-heavy Nasdaq Composite fell 2.5 per cent to its lowest since October 2014, weighed down by Microsoft, Amazon and Facebook, stocks that lent strength to the market last year.

All 10 major S&P sectors were down, with a 3.15 per cent fall in financial stocks as they followed European banks lower. US crude oil prices eased from their session lows, but were still down 2.8 per cent, while Brent was off 2 per cent. Global stock markets have closely tracked the rise and fall in the price of the oversupplied commodity this year.

– Additional reporting by Bloomberg and Reuters