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European stocks decline as geopolitical tensions weigh; Dax down 1.18%

Published 01/06/2016, 03:36 AM
Updated 01/06/2016, 03:36 AM
© Reuters.  European stocks decline amid North Korea, Middle East jitters

© Reuters. European stocks decline amid North Korea, Middle East jitters

Investing.com - European stocks were lower on Wednesday, as risk sentiment weakened after North Korea said it had conducted a successful nuclear test and as tensions between Saudi Arabia and Iran continued to mount.

During European morning trade, the EURO STOXX 50 declined 0.83%, France’s CAC 40 retreated 1.13%, while Germany’s DAX 30 tumbled 1.18%.

Equity markets weakened after North Korea confirmed on Wednesday that it had conducted a nuclear test and said that it won't give up nuclear capability unless U.S. abandons its hostile foreign policy towards the country.

Markets were also jittey amid growing tensions between Iran and Saudi Arabia, following the execution of a prominent Saudi Shia cleric.

Financial stocks were broadly lower, as French lenders BNP Paribas (PA:BNPP) and Societe Generale (PA:SOGN) declined 0.93% and 0.64%, while Germany’s Deutsche Bank (DE:DBKGn) and Commerzbank (DE:CBKG) dropped 0.51% and 1.92%.

Among peripheral lenders, Italy’s Intesa Sanpaolo (MI:ISP) and Unicredit (MI:CRDI) lost 0.53% and 2.33% respectively, while Spanish banks Banco Santander (MC:SAN) and BBVA (MC:BBVA) retreated 0.89% and 1.02%.

Thyssenkrupp AG O.N. (DE:TKAG) added to losses, with shares tumbling 2.45% after the company’s head Andreas Schierenbeck said it is already seeing an impact from weaker growth in China.

In London, commodity-heavy FTSE 100 lost 1.03%, weighed by sharp losses in the mining sector.

Shares in Glencore (L:GLEN) plummeted 2.84% and Antofagasta (L:ANTO) declined 3.47%, while Bhp Billiton (L:BLT) and Rio Tinto (L:RIO) plunged 3.73% and 3.89% respectively.

Financial stocks were also on the downside, as Lloyds Banking (L:LLOY) dropped 0.52% and Barclays (L:BARC) retreated 0.93%, while the Royal Bank of Scotland (L:RBS) tumbled 1.02% and HSBC Holdings (L:HSBA) plummeted 2.07%.

On the upside, Royal Mail (L:RMG) shares rallied 1.85% after Cantor Fitzgerald raised its recommendation on the stock from hold to buy.

In the U.S., equity markets pointed to a sharply lower open. The Dow Jones Industrial Average futures pointed to a 1.06% decline, S&P 500 futures signaled a 1.21% loss, while the Nasdaq 100 futures indicated a 1.13% drop.

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