Commodities tumble on grim economic data

EUROPE REPORT: Eurostoxx 50: 2,252.09 (-116.63) Paris CAC:2,988.01 (-173.15) Frankfurt Dax:4,381.47 (-182.76): EUROPEAN EQUITIES tumbled this week as investors took stock of an increasingly bleak economic picture and offloaded commodities stocks in response to a grim stream of data.

"It is a classic recession play. Oil and metals stocks are suffering because you don't need steel girders for buildings in a downturn or use as much energy. Resource stocks have been absolutely hammered," said Edmund Shing, an equity strategist at BNP Paribas.

Further pressure came yesterday after the US employment department announced more than half a million jobs were lost in the world's biggest economy in November. The pan-European FTSE Eurofirst 300 index sank 4 per cent yesterday to 793.94, bringing its drop for the week to 7.9 per cent as the latest figures from France showed its unemployment rate had hit 7.7 per cent in the third quarter.

Mining, metals and oil stocks formed the bulk of the losses as the weakening outlook for demand continued to cast a shadow over the resources sectors.

Portugal's Galp Energia shed 13.3 per cent to €7.44, Norway's StatoilHydro slipped 18.4 per cent to NKr96.40, while in Austria, OMV lost 13.7 per cent to €17.

Oilfield service providers also retreated. Technip of France dropped 23.5 per cent to €18.25, Italy's Saipem lost 17.6 per cent to €10.02 and Norway's Seadrill slid 21.2 per cent to NKr44.35.

French miner Eramet tracked its peers in London, falling 17.8 per cent to €119.74. Swedish steelmaker SSAB dropped 17.5 per cent to SKr53 and Paris-listed ArcelorMittal lost 16.7 per cent to €15.61 as metals prices sank to a six-year low.

Joining them were Germany's Q-Cells and Norway's Renewable Energy, among Europe's biggest players in the solar energy sector. This week, Charles Anton Milner, chief executive of Q-Cells, said solar energy companies may struggle for growth in the next few quarters due to limitations on capacity expansion because banks were tightening credit. Q-Cells retreated 7.6 per cent to €24.26. Renewable Energy fell 6 per cent to NKr61.50.

German chemicals group BASF tumbled 9.9 per cent to €22.61 after US peer Dupont gave a bearish update on Thursday. - (Financial Times service)