Markets

European markets close sharply lower on global economic fears

Key Points
  • U.S. manufacturing activity tumbled to lows not seen in over a decade, data published Tuesday showed, aggravating worries about a long-running trade dispute between Washington and Beijing.
  • British Prime Minister Boris Johnson unveiled his final Brexit offer to the European Union on Wednesday.

European stocks moved sharply lower at the end of Wednesday's session, after unexpectedly weak U.S. manufacturing activity stoked worries over the world's largest economy.

The pan-European Stoxx 600 was down 2.7% at the closing bell, on course for its largest one-day fall for almost a month. Several sectors plunged more than 3%, with construction and material stocks leading losses as all sectors and major bourses traded firmly in the red.

The moves came as investors reflected on weaker-than-anticipated economic data out of the U.S., which was compounded by German economic research institutes slashing GDP growth forecasts for Europe's largest economy.

U.S. manufacturing activity tumbled to lows not seen in over a decade, data published Tuesday showed, aggravating worries about a long-running trade dispute between Washington and Beijing.

Stocks on Wall Street also suffered a sell-off on the back of the data, with the Dow Jones Industrial Average and the S&P 500 both edging toward losses of 2%.

Market focus is also attuned to the Sino-U.S. trade war, with high-level trade officials from the U.S. and China expected to hold a fresh round of negotiations next week.

The world's two largest economies have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

Back in Europe, leading German economic institutes on Wednesday revised down German GDP growth for 2019 from 0.8% to 0.5% and cut 2020 projections from 1.8% to 1.1%, citing a manufacturing slowdown and high downside risks resulting from the trade war and Brexit uncertainty.

Elsewhere, British Prime Minister Boris Johnson presented his final Brexit offer to the European Union on Wednesday.

Speaking earlier at the Conservative Party conference, Johnson told delegates that his plan would "avoid checks at or near the border in Northern Ireland."

Early reports from the BBC have indicated that the proposal will include extra customs checks, a bigger role for the Northern Ireland Assembly and a time limit for Northern Ireland's different relationship with the EU, relating to the controversial Irish "backstop."

Reuters has reported EU sources as suggesting that if the proposed deal is as reported, the EU will reject it.

Sterling traded flat at $1.2302 at around 4:45 p.m. London time.

Stocks on the move

Shares of German business bank Grenke climbed 5% after a promising 9-month business update, while Carl Zeiss Meditec shares climbed almost 1% after the German medical technology company upgraded its guidance on stronger-than-expected sales.

British baker Greggs also saw gains as investors looked to capitalize on its lower share price following Tuesday's plunge.

At the other end of the Stoxx 600, financial services firm Hargreaves Lansdown ended the session 7.5% lower. The stock fell after Credit Suisse said the company's reputation could be further damaged by its involvement with high profile manager Neil Woodford's Equity Income Fund.

Shares of Germany's Fuchs Petrolub and British retailer Kingfisher slipped around 6%.

Finnish machinery company Metso fell 5.9% after its acquisition of Canada's McCloskey International.