European shares slide to worst monthly performance since 2011

European shares suffered their worst monthly performance in four years yesterday, as concerns over a Chinese economic slowdown and a possible US interest rate rise hit the region’s stock markets.

The pan-European FTSEurofirst 300 index closed down 0.2 per cent to record a monthly loss of 9 per cent – its worst monthly performance since August 2011.

Volumes were relatively thin as the British market was closed for a public holiday.

Germany’s Dax was down 0.6 per cent. Brent crude oil fell back below $49 a barrel after its biggest two-day rally in six years last week.

Chinese shares had another volatile session. The CSI300 index ended up 0.7 per cent, after falling 4 per cent at one point. The index was still down 11.8 per cent for August.

DUBLIN The Iseq bucked European trends to close up 1.5 per cent at 6,405. Aer Lingus surprised observers to close up 7.7 per cent at €2.67, which one trader put down to a last-minute market order with no pricing limit. The closing price was 12 cent above IAG's agreed offer of €2.55-a-share for the airline.

Heavyweight CRH, meanwhile, was the strong performer of the day, closing up 1.8 per cent at €26.69. It had been higher earlier in the session with a steady volume of shares been traded.

Ryanair performed well, ending up 1 per cent at €12.29. Paddy Power continued its inexorable march to €100, closing up 0.7 per cent at €98. Sentiment around the company was buoyed by last week's announcement of a planned tie-up with rival Betfair.

LONDON London markets were closed yesterday.

EUROPEAN Weaker Asian markets, coupled with more volatility in Chinese stocks which have fallen sharply this month amid signs of an economic slowdown in China, weighed on European shares.

"The Chinese markets remain in a sensitive position and most market participants remain bearish despite the positive swings experienced within the Shanghai Composite Index late last week," said FXTM research analyst Lukman Otunuga.

Shares in ArcelorMittal declined 4.3 per cent after the company's South African division said it was planning to shut two mills in the country as the unit struggles with weak demand and lower prices.

French telecoms group Iliad also fell 4.4 per cent, with some traders citing disappointment over its free cash-flow levels, even though Iliad reported higher interim profits.

On the upside, Eni rose 1.5 per cent after the Italian energy company announced the discovery off Egypt of the largest known gas field in the Mediterranean.

US US stocks were poised for their worst monthly drop in more than three years on worries about the health of China's economy and the timing of a US interest rate hike. All three major indexes slipped more than 1 per cent yesterday after weekend comments from Federal Reserve vice-chairman Stanley Fischer appeared to keep the door open for a rate hike in September.

Early yesterday evening, the Dow Jones industrial average was down 134.89 points, or 0.81 per cent, at 16,508.12; the S&P 500 was down 16.08 points, or 0.81 per cent, at 1,972.79; and the Nasdaq composite was down 33.66 points, or 0.70 per cent, at 4,794.67.

The S&P and the Nasdaq look set to post their biggest monthly loss since May 2012, while the Dow is on track for its worst monthly loss since 2010.

All 10 major S&P sectors were lower with the utilities index's 2.02 per cent fall leading the decliners. Twitter was up 2.5 per cent at $27.72 after SunTrust Robinson raised its rating to "buy" from "neutral". Netflix fell 2.3 per cent to $114.95 after the company said it chose not to renew its agreement with cable network Epix.

– Additional reporting Reuters/Bloomberg