European stocks dropped on Wednesday as a relentless slide in oil prices hit world markets, with a leading regional European equity index falling to a 15-month low.
Several traders and investors said it remained too risky to buy into the stock market at present, given concerns about the global economy and weak oil prices.
The pan-European FTSEurofirst 300 index fell 3.1 per cent to its lowest level since October 2014, while the euro zone’s blue-chip Euro STOXX 50 index also fell by a similar amount.
Germany’s DAX slid 3.1 per cent, leaving the DAX some 24 per cent below a record high reached last April.
European equities have steadily lost ground since last April, as concerns about a slowdown in China — the world’s second biggest economy and a leading consumer of metals and oil — have hit world markets.
Oil prices lost yet more ground after the International Energy Agency, which advises industrialised countries on energy policy, warned that oil markets could “drown in oversupply’’ in 2016.
“I am quite pessimistic about the equity markets for the next two to three months. I do not see a 2008-style scenario, but I do see a bear market coming,’’ said Andreas Clenow, hedge fund trader and principal at ACIES Asset Management.
Shares of European oil and energy companies were among the worst performers, with Norwegian offshore driller Seadrill slumping 11.6 per cent, while Tullow Oil fell 6.7 per cent.
Clenow said he had no “long’’ positions — namely those betting on future gains — in European equities at present, although he added that economic stimulus measures from the European Central Bank (ECB) would provide an element of support.
Hantec Markets’ analyst Richard Perry said it was too risky to buy into European stocks for now.
“The continued downside in the oil price is just smashing the markets and smashing sentiment,’’ said Perry.