European shares slide to six-month low as recession fears rise

European stocks tumbled to a six-month low on Wednesday, as an inversion in the US yield curve following bleak data out of major economies including Germany and China pointed to a looming recession.

Slumping exports sent Germany’s economy into reverse in the second quarter, while Chinese industrial output growth cooled to a more than 17-year low in July, underscoring the impact of a bruising US-China trade war on global growth.

Industrial data from the euro zone in June also had a poor showing.

DUBLIN

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Green Reit was the big winner in Dublin on Wednesday following news that Henderson Park is acquiring it in a €1.34 billion deal. The stock closed up over 4 per cent higher at €1.90 with more than 91 million shares traded. The uplift extended to Hibernia Reit, which advanced 3.6 per cent to €1.44.

It was yet another bad day for financial stocks with AIB down 5.5 per cent to €2.38 and Bank of Ireland 1.25 per cent lower at €3.16.

Airlines were weak even before it was confirmed that Spanish cabin crew at Ryanair are planning to hold 10 days of strikes. It fell 2.1 per cent to €8.84.

Other big fallers included Iseq heavyweight CRH, which shed 2 per cent to €28.59, and Glanbia, down 4.6 per cent to €11.

LONDON

Britain’s FTSE 100 tumbled to its lowest in more than two months on Wednesday after the yields on 10-year US and UK government bonds fell below two-year equivalents for the first time since the financial crisis, signalling mounting fears of recession.

The FTSE 100 index, already under pressure from weak Chinese economic data, ended down 1.4 per cent, with losses across all but one sector. The midcap index fell 1.5 per cent to a six-month low.

Upbeat corporate earnings helped some individual stocks. Admiral rose 4.1 per cent on its best day in over two years after the insurer posted a bigger-than-expected rise in earnings, driven by more customers in its UK business.

Balfour Beatty jumped 9.3 per cent, its biggest one-day rise in over 10 years, after the infrastructure company reported a leap in profits and upgraded its annual cash forecast.

However, blue-chip Prudential slipped 4.1 per cent to its lowest since January after the insurer, which has a sizeable Asian business, said it was monitoring the protests in Hong Kong. Sports Direct shed 10 per cent after the retailer said its auditor Grant Thornton had quit.

Conroy Gold and Natural Resources was down 8.5 per cent as it announced a new gold zone at its Slieve Glah prospect in Co Cavan.

EUROPE

The benchmark pan-European STOXX 600 index closed down 1.7 per cent, having touched its lowest since February 15th, with indexes in Germany, France, and political crisis riddled Italy falling more than 2 per cent.

Yields on two-year treasury notes rose above the 10-year yield for the first time since 2007, a metric widely viewed as a classic recession signal. That saw government borrowing costs in Germany fell to record lows.

All sectors were well in the red, with trade-sensitive technology slumping 3 per cent. The Frankfurt-dominated auto index followed with a 2.8 per cent drop, while falling yields took banks to a more than three-year low.

WALL STREET

The main indexes slid more than 2 per cent in early trading on Wednesday, while the CBOE Volatility index, also known as Wall Street’s “fear gauge”, rose 4.08 points to 21.60.

The biggest decliner on the S&P 500 index was Macy's , down 15.2 per cent, after the department store operator cut its full-year profit forecast as it discounted heavily to clear excess spring season inventory. Rivals Kohl's, Target and Nordstrom slipped between 2.7 per cent and 10.8 per cent.

Shares of Apple were down 2.1 per cent after boosting markets a day earlier with a 4 per cent rise.

– Additional reporting: Reuters