European shares fall as investors wait on signals from Yellen

European shares fell for the first time in four days as disappointing German sentiment data highlighted lingering concern about global growth before Federal Reserve chairwoman Janet Yellen’s Friday address in Jackson Hole, Wyoming.

The Stoxx Europe 600 Index slid 0.8 per cent to 342.24 at 11.27am in London, with almost all industry groups falling.

Germany’s equity benchmark DAX Index fell 0.9 per cent, for the biggest decline among major western European markets, as a report from the Ifo Institute showed that business sentiment in the region’s largest economy unexpectedly slipped in August.

France’s CAC Index and Switzerland’s SMI Index both lost at least 0.7 per cent.

“Ifo is influencing markets today, but all eyes are on Yellen,” said Ralf Zimmerman, an equity strategist at Bankhaus Lampe in Düsseldorf. “Investors won’t position too aggressively ahead of the Yellen speech.”

Investors seeking clues on the trajectory of US interest rates will look to Yellen for clarity after recent hawkish comments from Fed officials.

The rally that lifted the Stoxx 600 as much as 12 per cent since the Brexit vote stumbled last week on growing concerns over the European Central Bank’s ability to spur growth amid political turmoil and a banking crisis in Italy.

28-week withdrawal

A Bank of America report said investors withdrew money from the region's equity funds for a record 28 straight weeks.

True, recent economic data have beaten forecasts, and the Stoxx 600 rose 1.4 per cent this week through Wednesday. But Thursday’s worse than forecast reading on German confidence indicates that companies remain cautious about prospects after Britain’s decision to leave the European Union.

European pharmaceutical shares followed their US peers lower after comments from Democratic presidential candidate Hillary Clinton revived concerns about potential drug pricing changes.

Glencore and ArcelorMittal led a gauge of miners to one of the worst performances on the Stoxx 600 as iron ore retreated.

Playtech rose 4.2 per cent after the gambling-software provider reported an increase in first-half revenue and announced a special dividend.

Jimmy Choo added 5.3 per cent after the maker of luxury shoes posted higher first-half revenue and earnings and said it remains optimistic on this year’s prospects.

CRH rose 3.4 per cent after the Irish construction company posted higher than expected first-half sales and profit.

– (Bloomberg)