Thursday, January 14, 2016

European shares fall sharply as oil prices drop

European shares fell sharply on Thursday after two sessions of gains, with the sentiment depressed by continued weakness in oil prices - which briefly dipped below $30 - and worries over global economic growth.

The pan-European FTSEurofirst 300 fell to its lowest intraday level since late August following a Reuters report saying many European Central Bank policy makers are sceptical about the need for further near-term policy action.

"Expectations of more ECB help were growing. But news like this is a cold shower for such expectations in a climate already (made nervous) by the China situation, geopolitical tensions in Korea and this morning's attacks in Jakarta," said Marco Vailati, head of research at Italy's Cassa Lombarda.

By 0933 GMT, the FTSEurofirst 300 was down 2.3 per cent at 1,323.65 points, having earlier hit 1,315.37, its lowest level since August 24.

Fiat Chrysler was the steepest loser, falling more than 7 per cent with traders citing a report in Automotive News saying two US car dealerships had filed a lawsuit accusing the carmaker of falsifying sales.

The company denied the lawsuit had been served in a statement to the industry news site.

Weaker-than-expected results sent Swiss chocolate maker Lindt & Spruengli down 3.6 per cent, while Richemont fell 2.4 per cent after the Cartier owner said business was likely to remain challenging following a 4 per cent quarterly sales drop.

Tesco was the top performer, climbing 5.3 per cent after lower prices and more staff helped the British supermarket chain post a better-than-expected result over the Christmas period.

"Tesco further underscores a good UK superstore festive season," Shore Capital analyst Clive Black said.

Mining giant BHP Billiton rose 1.4 per cent after upgrades from brokerage firms Morgan Stanley and Citi.

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