Concerns over China drag down Europe

European stocks posted their biggest five-day drop this year amid investor concern over China’s economy as shares tumbled in Shanghai and data disappointed. In Ireland, traders said it was a weak day and the Iseq Overall Index fell by 2.5 per cent to 6,318.62.

DUBLIN

Ryanair

closed down 2.5 per cent at €12.01 after cautioning that overcapacity could weigh on average fares. Its first quarter results yesterday showed a 25 per cent rise in net profit but it disappointed the market by leaving its profit guidance unchanged. Building materials group CRH fell almost 3 per cent to €25.915, mirroring similar declines among its peers.

Bank of Ireland closed down 2.3 per cent at 37.5 cent while Permanent TSB finished 1 per cent lower on €5.015. Both report interim results this week.

Hibernia Reit was one of the few main market stocks to record a rise, closing the day up 1 per cent at €1.312.

EUROPE

Daimler AG and

BMW

AG, which are both sensitive to growth in China, fell at least 2.6 per cent, as auto-related companies slid to the joint-worst performance on the Stoxx Europe 600 Index.

UBS Group AG lost 2.3 per cent after results showed its wealth management unit grew by the smallest amount in more than four years in the second quarter.

The Stoxx 600 retreated 2.2 per cent to 385.91 at the close of trading, for a 5.1 per cent five-day decline. Italy’s FTSE MIB Index and France’s CAC 40 Index led western-European markets lower, falling at least 2.6 per cent.

China’s benchmark index tumbled the most in more than eight years after a report showed industrial profits contracted 0.3 per cent in June, while concern grew that a three-week rally sparked by unprecedented government intervention is unsustainable.

The Stoxx 600 has given up more than half of the rally sparked by Greece’s agreement with its creditors. It reached a peak on July 20th before a rout in commodity stocks, which rely heavily on China’s appetite for resources, helped drag European shares to their first weekly drop in three.

LONDON

UK stocks fell for a fifth day, extending a decline after their worst week in 2015, amid concern over a slowdown in China.

Pearson Plc fell 4.8 per cent after announcing plans to dispose of its stake in The Economist magazine, just days after the sale of The Financial Times newspaper.

Ryanair Holdings Plc retreated 1.4 per cent after cautioning that over-capacity could weigh on average fares.

The FTSE 100 Index lost 1.1 per cent to 6,505.13 at the close in London. The broader FTSE All-Share Index dropped 1.2 per cent.

Reckitt Benckiser Group Plc advanced 1.4 per cent after reporting quarterly revenue growth that beat estimates and increasing its full-year target.

NEW YORK

US stocks fell, with equities headed for their longest losing streak since January, after the biggest slump in eight years for Chinese shares amid concern over the nation‘s economic growth.

Apple slipped 1.4 per cent after its worst week in six months. Baidu, China's largest search engine, lost 4.5 per cent. Alibaba Group Holding Ltd retreated 2 per cent. Energy shares dropped as oil sank.

Teva Pharmaceutical Industries Ltd surged 12 per cent after agreeing to buy Allergan Plc‘s generic-drug business for $40.5 billion. Allergan added 6.9 per cent.

The Standard and Poor‘s 500 Index slid 0.5 per cent to 2,069.57 at 1.51pm in New York, after falling as much as 0.8 per cent. The gauge had earlier trimmed declines in half after hitting its average price during the past 200 days.

The Dow Jones Industrial Average lost 126.24 points, or 0.7 per cent, to 17,442.29, reaching its lowest level since February. The Nasdaq Composite Index fell 0.9 per cent.

– (Additional reporting by Bloomberg)