Europe Markets

Europe markets close down 3%; China and oil dominate

Europe markets close down 3%; China and oil dominate

European stock markets faced severe selling on Friday, with major markets crashing in excess of 2.5 percent, following U.S. stocks lower as worse-than-expected Chinese economic data and a sharp drop in oil prices spooked traders.

The pan-European FTSEurofirst 300 closed down 3 percent, suffering its worst one day fall since October of last year.

London's main index, the FTSE 100, finished 2.8 percent lower, closing out its worst weekly loss in 2015. Germany's DAX finished just shy of 3 percent while the French CAC plunged 3.2 percent.

U.S. stocks plunged on Friday, extending a recent rout as concerns about slowing global growth continued to pressure investor sentiment.

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Oil was testing investors' nerves on Friday, with light crude trading near $40 per barrel in afternoon trade on increased fears over the health of the world's greatest consumer, China. U.S. oil prices heading for its eighth week of falls running on Friday, the longest losing streak since 1986. Brent dipped down to $45.40 in afternoon trade, while light crude dropped over 2.5 percent, trading around $40.20.

Europe also followed big falls across Asian stock markets on Friday, after China August PMI data showed that factory activity in the world's second-biggest economy shrank at its fastest pace in more than six years. The Shanghai Composite closed over 4 percent lower.

In Greece, Prime Minister Alexis Tsipras resigned on Thursday and called snap elections in September, a move aimed at strengthening his grip on power. After fighting the last election on an anti-austerity platform, and spending most of his time in office attempting to reverse some of the changes made in Greece under its international bailout, he was eventually forced to back down in negotiations with the country's creditors in July. The Greek stock market reacted negatively, down 2.5 percent.

Stocks to watch

In individual stocks news, Spain's Banco Sabadell, which on Friday said it had completed the acquisition of 100 percent of Britain's TSB bank. TSB was formerly part of Lloyds Banking Group, which was bailed out by the U.K. government during the 2008 global financial crisis. Shares in the bank fell in line with the broader market, down over 3 percent.

Also on Friday, Britain's GlaxoSmithKline said it had sold the remaining rights to its ofatumumab drug for up to $1 billion to Swiss pharmaceutical giant Novartis. Shares in GSK were down around 3 percent while Novartis shares were 3.6 percent lower.

Europe needs to get its swagger back

Companies in the auto and luxury sector have seen a fallout from concerns over the Chinese economy and the depreciation of the yuan. France's Peugeot Citroen and Germany's Daimler were both sharply lower.

On the other end of the scale, many of the miners were in positive territory as gold gets a safe haven rebound during early trade, with stocks like Randgold Resources and Anglo American outperforming, down around 0.3 percent.

Next week: What's on the cards

Week ahead: August 24