Worries over US-China trade agreement dampen markets

European shares fell on Tuesday, led lower by auto stocks as investors started to question whether the truce agreed by the United States and China on their trade dispute would lead to a long-term deal.

US stocks plunged, with the Dow Jones Industrial Average tumbling more than 800 points, as a litany of concerns wiped out the rally in risk assets.

Dublin

The Iseq fell 2.5 per cent, tracking its European peer indices, which all struggled on a day dominated by gloom over global trade prospects.

The State's two pillar banks performed poorly, which helped to drag the index down. Bank of Ireland fell 3.6 per cent to close the session at €5.34, while AIB dropped 2.7 per cent to finish at €3.70.

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Building materials behemoth CRH, which is usually affected by worries over global trade due to its heavy presence in the US and worldwide, fell 3.8 per cent to €24 per share.

Ryanair fell 2.3 per cent to €11.40, despite striking a deal with German unions.

London

The Ftse 100 closed down 0.6 per cent, with the stronger sterling dragging on its exporter-heavy constituents.

Thomas Cook shares fell as much as 16.9 per cent to hit their lowest level in six years amid growing concerns about the tour operator's debts. The shares closed 3.9 per cent lower after an extremely choppy session as investors braced for the stock to be demoted from the midcap index. Its credit default swaps soared and bonds fell to all-time lows.

The quarterly reweighting of the indexes also roiled some shares, with Hiscox expected to oust Royal Mail from the blue chips and storied carmaker Aston Martin set for promotion to the midcap index just two months after its IPO. Final moves will be announced by the LSE on Wednesday based on market cap at Tuesday's close.

BAE Systems, down 5.5 per cent, was one of the biggest decliners after Deutsche Bank cut its price target on the stock.

Mining stocks such as Antofagasta and Glencore, down 3.5 and 1 per cent respectively, fell as copper prices eased back on doubts over how fragile a trade truce struck at the G20 on Saturday was.

Randgold Resources and Fresnillo both rose more than 3 per cent as the gold miners benefited from investors' bid for gold, considered a safer store of value in volatile markets. Gold prices climbed to over a one-month high as the dollar slipped.

Europe

French catering group Elior sank 8.6 per cent after cutting its sales growth outlook, and Belgian postal services firm Bpost plunged 22.8 per cent after a profit warning. France's JCDecaux fell 2.9 per cent after Exane BNP Paribas reinitiated its coverage of the stock with an "underperform" rating.

Energy stocks gave up earlier gains as crude prices came off highs on worries that demand would stall due to a Sino-US trade war, and that Russia remained a stumbling block to a deal to cut global crude supply.

German industrial gases group Linde will replace British bank Barclays on the leading index of pan-European stocks Stoxx Europe 50, it was announced. The change comes as part of the quarterly reshuffle and will be effective at the opening of European trading on December 24th. Linde shares rose 2.1 per cent and Barclays was down 2.6 per cent.

New York

The KBW Bank index slid 4.90 per cent with Bank of America and Citigroup dropping more than 5 per cent each. The overall S&P financial sector dropped 4.03 per cent.

The technology sector fell 2.8 per cent, while industrials dropped 3.47 per cent over a lack of specifics on the Sino-US trade truce. Trade bellwethers Boeing 3.6 per cent drop and Caterpillar 5.7 per cent retreat weighed the most on the Dow, while twin declines of 3.7 per cent in Amazon and Apple dragged on the Nasdaq and S&P.

Apple dropped on bearish comments from brokerage HSBC and as supplier Cirrus Logic's lowered outlook added to growing evidence of tepid iPhone sales.