Europe Markets

Europe ends sharply down as bank earnings weigh; miners tank; autos slide


European markets ended sharply lower on Tuesday as earnings from leading banks disappointed investors, and a sharp decline in mining and autos stocks weighed on sentiment.

The pan-European STOXX 600 finished around 1.7 percent down provisionally, with all sectors closing in negative territory.

Looking at the major bourses, the U.K.'s FTSE 100 was off 0.9 percent while France's CAC 40 slipped 1.6 percent and Germany's DAX sunk 1.9 percent by the close. Sharp losses from the banks weighed on Spain's IBEX and Italy's FTSE MIB, which both closed over 2 percent down.

China data rocks markets, miners

European sentiment failed to get a lift from some of Asia's gains seen overnight; with its markets closing mixed to higher despite a disappointing manufacturing purchasing manager's index (PMI) from China. The China Caixin manufacturing PMI for April fell to 49.4 from March's 49.7, coming in below a Reuters forecast for 49.9. Levels below 50 indicate contraction. The new data, however, did weigh on U.S. markets, which were trading in the red on Tuesday.

Basic resources stocks took a hit on the back of the latest China data, closing down 6.4 percent as a sector. Anglo American shares slumped 12.8 percent, while Rio Tinto, Glencore and BHP Billiton all closed over 6 percent lower.

Precious metals firm Fresnillo, slipped over 3.5 percent despite reporting that it had achieved record gold and silver production in 2015, and said that 2016 will "see a turnaround" after "operational challenges" last year.

A sharp fall in the price of oil also weighed on markets, as rising production from the North Sea and Middle East triggered renewed concerns of a global supply glut among investors, Reuters reported. Both Brent and U.S. crude were off 2 percent or more at Europe's close, trading at $44.89 and $43.60 respectively. This caused stocks to tumble, with Tullow Oil sinking 11.6 percent.

Bank shares fail to stay afloat

Bank earnings were in the spotlight in Europe on Tuesday. HSBC reported an 18 percent drop in adjusted pre-tax profit to $5.43 billion in the first quarter, with shares reversing earlier gains to close some 1.6 percent down.

Shares in French bank BNP Paribas initially rallied after it reported a 10 percent rise in net profit in the first quarter, beating expectations, but its investment banking division took a hit from a volatile market environment. Turbulence in the overall sector however caused it to close 1 percent down.

Germany's Commerzbank reported net income of 163 million euros ($188 million) for the first quarter of 2016, a 52 percent year-on-year fall, sending shares 9.5 percent down by the close.

UBS first-quarter adjusted profit before tax came in at 1.4 billion Swiss francs ($1.47 billion), the bank reported on Tuesday, down from adjusted profit before tax of 2.3 billion Swiss francs in the same period in 2015. Its wealth management business attracted strong inflows, but said it saw "abnormally low" transaction volumes in the first quarter as clients became more risk averse. Shares sank 7.5 percent.

BMW shares hit the brakes

Shares in German carmaker BMW fell 3.8 percent after it reported a 2.5 percent fall in first-quarter earnings before interest and tax (EBIT), missing market expectations.

And German airline Lufthansa said it was slowing its capacity growth due to price pressures, adding that the attacks in Brussels and Paris are affecting customers' booking behaviour. The carrier reported a first-quarter adjusted loss before interest and tax of 53 million euros, narrowing from the 167 million euro loss in the same period last year. Shares closed over 5 percent lower. Other airlines including and Air France-KLM also finished in negative territory.

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Elsewhere, shares in RSA Insurance Group popped 2.8 percent after Barclays raised its price target for the stock.

But British fund management firm Aberdeen Asset Management shares closed over 7 percent down after it reported a sharp fall in pretax profit for the six months to March 31.

Shares in food delivery service Just Eat rallied, closing almost 5 percent up and were one of the best performers after it raised its full-year guidance.

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