×

European shares end lower on China rate rise worry

By Simon Jessop LONDON, Nov 12 (Reuters) - European shares ended lower on Friday after talk of an interest rate rise in China unnerved investors and sent macro-sensitive commodity stocks tumbling, while gains in the euro zone periphery helped cap losses. The FTSEurofirst 300 closed down 0.4 percent at 1,103.99 points, off a low of 1,088.36, with shares in Ireland, Spain and Portugal supported by an overnight pledge of fiscal support from euro zone leaders. Chinese stocks had closed more than 5 percent lower, their biggest one-day slide in over a year, on speculation the central bank would raise rates again to combat inflation. "The developing nations in Asia really did contribute to the upswing in the global economy, led by China, and now China is applying the restraint, and not just selectively as it was before," Mike Lenhoff, chief strategist at Brewin Dolphin Securities, said. The China talk led many investors to "take some profits off the table" ahead of the weekend, with G20 leaders still meeting in South Korea, added Kishan Mandalia, trader at City Index. Commodity stocks took the biggest hit across Europe on investor concern higher interest rates in China would hit economic growth, with front-month copper, zinc, aluminium and nickel all firmly in the red. Leading the charge to the downside in the 2.1 percent weaker STOXX Europe 600 Basic Resources index were miner Kazakhmys and steelmaker Salzgitter, both of which ended down more than 3 percent. Similarly, crude price falls on the growth fears fuelled a 1.5 percent fall in the STOXX Europe 600 Oil & Gas index, with BG Group down 1.8 percent. The technical outlook for regional blue-chips to the end of the year remains bullish, however, in spite of the Eurostoxx 50's 0.3 percent fall, said Philippe Delabarre, technical analyst at Paris-based Trading Central. PERIPHERAL REBOUND Peripheral euro zone stock markets rose for most of the day, recovering some lost ground against core Europe, after politicians reassured holders of sovereign bonds in those countries they would not be hit should a bailout be needed. Portugal's PSI20 and Spain's IBEX 35 ended up 0.5 percent and 0.8 percent respectively, though fresh talk Ireland could tap European bailout funds took the shine off its early gains and the ISEQ ended up 0.1 percent. The gains for the periphery come off a low base, as most indexes have lagged their core-Europe peers, said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, in Brussels. Elsewhere among heavyweight sectors, the STOXX Europe 600 Banks index ended up 0.4 percent, led by Irish lenders Allied Irish Banks, up 16 percent, and Bank of Ireland , up 7 percent. Across Europe, the FTSE 100 index ended down 0.3 percent, Germany's DAX was up 0.1 percent and France's CAC 40 was down 0.9 percent. (Reporting by Simon Jessop; editing by David Hulmes) Keywords: MARKETS EUROPE STOCKS Keywords: MARKETS EUROPE STOCKS ============================================================= For rolling updates on what is moving European shares please click on ============================================================= For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide................... FTSEurofirst 300 index.............................. DJ STOXX index...................................... Top 10 STOXX sectors........................... Top 10 EUROSTOXX sectors...................... Top 10 Eurofirst 300 sectors................... Top 25 European pct gainers....................... Top 25 European pct losers........................ Main stock markets: Dow Jones............... Wall Street report ..... Nikkei 225............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. Frankfurt market stories CAC-40................. Paris market stories... World Indices...................................... Reuters survey of world bourse outlook.......... Western European IPO diary........................... European Asset Allocation......................... Reuters News at a Glance: Equities............... Main currency report:............................... Keywords: MARKETS EUROPE STOCKS/ =3 (simon.jessop@thomsonreuters.com; +44 207 542 5052, Reuters Messaging:simon.jessop.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.