Miners and weak earnings drag European stocks lower

European stocks retreated from six-week highs on Thursday, with miners leading the declines on renewed concerns about China’s property sector, while mixed quarterly updates from companies dampened risk appetite.

The Europe-wide Stoxx 600 index fell 0.2 per cent due to a dour mood in global markets following the collapse of a $2.6 billion asset sale at indebted developer China Evergrande Group.

European miners, which have a large exposure to China, shed 2.5 per cent. UK-listed shares of Anglo American fell 3.7 per cent even though it reported a 2 per cent rise in overall production in the third quarter.

Worries about China’s plan to bring down coal prices hit high-flying metal prices on Wednesday.

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“China’s macro cycle has troughed, but growth remains subdued,” said Andreas Bruckner, Bank of America’s European equity strategist, who earlier this month set a year-end target of 420 for the Stoxx 600, implying a fall of about 10 per cent from current levels.

"The downside risks relative to our projections are increasing, given the potential additional drag from supply-chain disruptions, energy shortages in Europe and China, the intensifying debt crisis in China's property sector, and the risk of a central bank policy mistake."

Swiss engineering and tech group ABB tumbled nearly 6 per cent after it lowered its full-year sales forecast and warned of shortages of components, while Sweden's AB Volvo fell about 0.8 per cent after it said chip shortages hampered production of its trucks.

There was no relief for banking stocks either. The sector fell 0.9 per cent even though UK's Barclays and Finland's Nordea reported upbeat quarterly results.

Defensive sectors lent support to European bourses as personal and household goods index rose 0.7 per cent on the back of Unilever’s third-quarter earnings beat.

Luxury stocks were also higher after Birkin bag maker Hermes rose 0.8 per cent on strong quarterly sales.

Cartier-owner Richemont advanced 0.4 per cent after HSBC raised the brand to "buy" from "hold", citing its leadership and momentum in the jewellery industry. – Reuters