European shares drop on weak Chinese data and trade fears

European shares saw their week-long rally come to a halt on Wednesday, driven by weakness across oil companies and banks, as soft Chinese economic data and US president Donald Trump’s tough stance on trade talks with Beijing prompted investors to cash in some of June’s gains.

The pan-European Stoxx 600 index closed down 0.3 per cent.

Dublin

The Iseq index dropped 1.5 per cent to 6,131.58, with market heavyweight CRH pulling back 3.2 per cent to €27.93, in line with a broad sell-off by European and US peers, as sector-followers fretted about the outlook for global trade and growth.

Banking shares were out of sorts, with Bank of Ireland down 1.9 per cent at €4.70, Permanent TSB off 1.6 per cent at €1.25 and AIB slipping 0.7 per cent to €3.67.

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Dalata Hotel Group lost 2.9 per cent to €5.28 amid mounting concerns of a hard Brexit in October. Boris Johnson, front-runner to replace Theresa May as UK prime minister, said on Wednesday he doesn't want a no-deal Brexit but the UK must prepare for one as a negotiating tactic.

Bucking the trend, Malin Corp added 7.5 per cent to €4.30, while insurer FBD gained 2 per cent to €8.98.

London

The Ftse 100, up for seven days straight after falling more than 3 per cent in a global stock market sell-off in May, dipped 0.4 per cent on Wednesday.

Oil majors were the biggest drags on the main index as oil prices slid more than 2 per cent.

Financial stocks also weighed as President Donald Trump added to the trade nerves by saying he was not interested in a deal with Beijing unless it agreed to some "major points" in negotiations, while China declared it was "not afraid of fighting a trade war".

British American Tobacco skidded 4.4 per cent on its worst day in seven months after it warned of steeper declines in cigarette sales globally mainly due to waning demand in its main US market.

Reckitt Benckiser ended the session 4.4 per cent higher. The consumer goods firm named PepsiCo executive Laxman Narasimhan to succeed outgoing chief executive officer Rakesh Kapoor.

Europe

The biggest faller was Europe’s oil and gas index, down 2.2 per cent, as the commodity’s price took a hit from an unexpected rise in US crude inventories and by a weaker outlook for global demand.

Banking stocks, which tend to suffer when expectations for interest rates fall, lost 1.1 per cent.

Italy's Ftse MIB fell 0.7 per cent and its banking index dropped 1.5 per cent as the European Union moved closer to taking disciplinary action over the country's growing debt.

Chipmakers, which get a huge portion of their revenue from China, fell, with AMS AG and STMicroelectronics declining 3.5 per cent and 1.8 per cent, respectively.

Axel Springer jumped 11.5 per cent to touch a nine-month high after funds controlled by US private equity investor KKR offered to buy out minority shareholders of the German publisher for €63 a share, a 40 per cent premium to its market price.

New York

Wall Street’s main indices were lower in early afternoon trade on worries of a prolonged US-China trade war, but losses were cushioned by a muted reading on inflation that backed the case for an interest rate cut.

Data showed consumer prices edged up 0.1 per cent in May, in line with expectations of economists polled by Reuters and pointed to moderate inflation.

"These numbers will add some fuel to the case made by the markets and many analysts that the Fed should cut rates," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.

Adding pressure on the main indexes were declines in shares of oil majors Exxon Mobil and Chevron as crude prices fell. – Additional reporting: Reuters