Europe ends sharply lower despite China suspending circuit breaker

Despite trimming losses, European markets still closed sharply lower on Thursday, as further turmoil in the Chinese stock market and a turbulent oil environment, rocked investor sentiment.

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The pan-European STOXX 600 finished down 2.2 percent provisionally, with all sectors sharply lower, in what had been a turbulent day for markets.

The German DAX index slipped below 10,000 points during trade, for the first time since mid-October, however the index came off its session lows, to close down 2.3 percent.

London's FTSE finished 2 percent lower, dragged down by its mining stocks, while France's CAC ended 1.7 percent down.

Circuit breaker suspended

The China Securities Regulatory Commission suspended its circuit breaker system Thursday after trade in China was halted for a second time in a week overnight. A 7 percent stock drop triggered a circuit breaker, with Chinese markets open for less than half an hour in total.

The news of the suspension helped markets recover slightly, however, markets in Europe and the U.S. remained under pressure.

"I think China's suspending their circuit breaker rule was a great help ... The thinking is there's not going to be this mad rush to the opening bell," said Jeremy Klein, chief market strategist at FBN Securities.

The triggering of the circuit breaker for a second time, was a blow to markets across Asia, which were already wallowing after a weaker open due to concerns over China's currency, the economic slowdown and a fall in oil prices.

Oil prices recover

Oil also remained on the radar for investors. Brent crude fell sharply to levels not seen since April 2004, with it trading around $32.77 a barrel in early trade, however since then Brent came off session lows to trade higher, last trading at $34.45.

Much of the earlier negative sentiment came from concerns over the Chinese economy and continued worries over oversupply in the market, however, violence in the Middle East and North Africa offered reassurance to traders. U.S. crude also fell to their lowest since late 2003 before recovering, last trading at $33.99.

Despite the late recovery, oil and gas stocks remained badly hit. Seadrill closed off over 7.5 percent while oil majors such as Subsea 7, Sbm offshore and Shell all finished sharply lower, over 3 percent.

And oil was not the only commodity affected. Metal prices were under pressure as the turmoil in Chinese markets has sparked demand worries. Basic resources was the worst-performing sector, down some over 5 percent.

Anglo American was one of the STOXX 600's worst performers, down 11 percent. Glencore and BHP Billiton were both closed more than 5 percent down. One commodity stock that bucked the trend was Randgold Reserves, which was up around 1.7 percent, on the back of rising spot gold prices.

Autos, luxury fall on China worries

China worries also hit a number of auto stocks, given that many sell into the world's second-largest economy. Germany's BMW and Daimler were down sharply over 4 percent.

Volkswagen was off 4.7 percent on a report by German newspaper Sueddeutsche Zeitung suggesting that it may have to buy back 115,000 cars in the U.S. as a result of the emissions scandal.

Pressure was also on for luxury stocks, many of which rely on Chinese consumers. Swatch, Richemont and Christian Dior all closed lower.

However, Danish jewellery maker and retailer Pandora shot up 4.5 percent after it said on Thursday that it plans to add between 200 and 300 stores a year between 2016 and 2018 after sales jumped by 40 percent in 2015, Reuters reported.

Apple's stock closed down 2 percent on Wednesday and briefly fell below the $100 mark after reports the U.S. technology giant is slashing production of its iPhone 6s and 6s Plus devices. This had a knock-on effect on Apple's European suppliers with Dialog Semiconductor off more than 9 percent and Austria Microsystems down over 5 percent.

On the data front, the euro zone unemployment rate fell to 10.5 percent in November, its lowest level in more than four years. In addition, economic sentiment in the euro zone rose to 106.8 points in December from 106.1 in November, according to a European Commission poll.

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