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European stocks lower as Draghi warns on economy; Dax down 1.2%

Published 06/09/2016, 04:54 AM
© Reuters.  European stocks lose ground on concern over global economy
UK100
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FCHI
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DE40
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JP225
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HSBA
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Investing.com - European stocks fell for a second consecutive session on Thursday, as concern over the global economy continued to weigh on investor sentiment and European Central Bank (ECB) Mario Draghi called on leaders to act to support growth.

During European morning trade, the EURO STOXX 50 fell 0.94%, France’s CAC 40 traded down 1.03%, while Germany’s DAX 30 lost 1.23%.

Speaking in the Brussels Economic Forum, Draghi brought home the disconnect between monetary and fiscal policy and insisted that governments needed to do more to support the euro zone economy.

“There are many understandable political reasons to delay structural reform, but there are few good economic ones,” Draghi said.

“The cost of delay is simply too high,” he warned.

Draghi promised that the ECB would not undershoot its inflation objection for longer than is avoidable, but urged others to ensure that “output is returned to potential before subpar growth causes lasting damage.”

In other signs of weakness in the global economy, Japan saw core machinery orders tumble 11% in April, much worse than the 3.8% expected. The news, along with a stronger yen, sent the Nikkei down 0.97%.

In Germany, exports stagnated in April, though the read was better than the forecast for a 0.6% decline.

The motor of euro zone economy also showed weak domestic demand as imports unexpectedly fell.

Meanwhile, oil prices added to overnight gains on Thursday, climbing to a fresh 11-month high after data showed crude stockpiles in the U.S. fell for the third straight week last week.

In European equities, energy stocks were lower, as French oil and gas major Total SA (PA:TOTF) lost 1.82% and Italy’s ENI (MI:ENI) SpA fell 1.27%, while Norwegian rival Statoil (OL:STL) ASA traded down 0.86%.

Financial stocks added to losses. French lenders BNP Paribas (PA:BNPP) and Societe Generale (PA:SOGN) fell 1.12% and 1.77%, respectively, while Germany’s Deutsche Bank (DE:DBKGn) dropped 1.43%.

Among peripheral lenders, Italy’s Intesa Sanpaolo (MI:ISP) and Unicredit (MI:CRDI) fell 1.35% and 0.47% respectively, while Spanish banks BBVA (MC:BBVA) and Banco Santander (MC:SAN) gave up 0.84% and traded flat, respectively.

In London, FTSE 100 lost 0.87%. Vodafone (LON:VOD) captured headlines, tumbling more than 4% after the sale of its New Zealand business to Sky Network Television for $2.4 billion in shares and cash.

Miners were also under pressure. Anglo American (LON:AAL) and BHP Billiton (LON:BLT) slumped 6.22% and 2.27%, respectively, while Glencore (LON:GLEN) fell 1.89% and shares in Rio Tinto (LON:RIO) lost 1.45%.

Financial stocks were broadly lower, though the Royal Bank of Scotland (LON:RBS) edged up 0.04% . However, Lloyds Banking (LON:LLOY) gave up 0.75%, HSBC Holdings (LON:HSBA) lost 0.65% and Barclays (LON:BARC) fell 0.90%.

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.26% decline, S&P 500 futures a 0.34% decrease, while the Nasdaq 100 futures indicated a 0.31% drop.

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