European shares edge lower as Chinese economy loses steam

European shares fell on Wednesday on a drag from banks, as increasing evidence of China’s economy rapidly losing steam kept investors on the edge, while UK stocks came under pressure from rising worries over sticky inflation.

Missed payments on investment products by a leading Chinese trust firm and a fall in home prices added to worries that China’s deepening property sector crisis is stifling what little momentum the economy has left.

Dublin

The Iseq bucked the trend across Europe, rising 0.3 per cent as it was boosted by gains for most of its major stocks, including a 6.1 per cent surge for Glanbia.

The food group’s shares closed at €14.71 on a day when it reported a 6 per cent rise in earnings and a rise in margins to 7.2 per cent, with the company also upgrading its guidance for the full year as group managing director Siobhán Talbot announced her decision to retire at the end of 2023.

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Cement-maker CRH added 0.9 per cent to €53.18, Bank of Ireland climbed 1 per cent to €9.60 and packaging group Smurfit Kappa rose 1.1 per cent to €36.52. There was also a gain for Ryanair, which finished 0.6 per cent higher at €15.88.

But Flutter Entertainment fell 1.5 per cent, with the Paddy Power Betfair owner closing at €160.50.

London

The blue-chip FTSE 100 fell 0.4 per cent on growing worries about persistently high British inflation as key measures of price growth monitored by the Bank of England failed to ease in July, despite a sharp drop in headline inflation. The mid-cap FTSE 250 index also declined 0.4 per cent.

China-exposed HSBC Holdings fell for the fifth consecutive session, shedding 1.7 per cent to a more than two-month low.

British motor and home insurer Admiral Group jumped 7.2 per cent following a marginal rise in first-half pretax profit. Insurer Direct Line also spiked 7.1 per cent, becoming the top gainer on the mid-cap index.

Balfour Beatty slumped 10.6 per cent after its chief executive said the infrastructure firm is facing challenges in its US office projects.

Shares of Aviva rose 0.9 per cent after the life and general insurer posted a forecast-beating rise in first-half operating profit.

Europe

The pan-European Stoxx 600 closed the day 0.1 per cent lower, after falling as much as 0.4 per cent and touching a new one-month low intraday. In Frankfurt, the Dax edged up 0.1 per cent, but the Cac 40 in Paris declined 0.1 per cent.

The European banks index lost 0.7 per cent, touching a one-week low, while luxury giants LVMH and Kering, exposed to Chinese consumer demand, also lost 0.2 per cent and 0.4 per cent respectively.

A flash estimate showed the euro zone’s second-quarter GDP rose by 0.3 per cent quarter on quarter, while another data set showed June industrial production increased by 0.5 per cent month on month.

German life-science company Bayer lost 1.7 per cent following a Berenberg rating downgrade to “hold” from “buy”.

US

The S&P 500 and Dow rose in early trading as Target’s upbeat quarterly profit lifted the retail sector, while investors awaited minutes of the Federal Reserve’s July policy meeting for cues on the central bank’s interest rate path.

Target shares gained 3 per cent after the big-box retailer’s second-quarter profit beat estimates, dwarfing its annual forecast cut.

Department stores Macy’s and Kohl’s edged up 0.1 per cent and 0.6 per cent respectively. Home Depot climbed 1.3 per cent in a big boost to the industrials-heavy Dow.

Keeping the Nasdaq under pressure, Tesla slid 1.8 per cent after the electric-car maker cut prices for its premium Model S and Model X cars in China by more than 6 per cent. – Additional reporting: Reuters