Inflation in euro zone drives stocks lower

Eurostoxx 50: 2,179.66 (–32.78) Frankfurt DAX: 5,502.02 (–137.56) Paris CAC: 2,981.96 (–45.69)EUROPEAN STOCKS fell yesterday, extending the Stoxx Europe 600 Index's largest quarterly decline since 2008, as reports on Chinese manufacturing and German retail sales added to concern the economy is slowing.

The Stoxx 600 fell 1.2 per cent in London.

“The situation is quite dark right now,” said Philipp Musil, who helps manage about $11 billion at Semper Constantia Privatbank in Vienna. “We’re very cautious about equities. All in all the figures are not good and many investors think we’re going straight into a recession.”

European inflation accelerated to the fastest in almost three years in September, complicating the European Central Bank’s task as it fights the region’s worsening sovereign-debt crisis.

The euro-area inflation rate jumped to 3 per cent from 2.5 per cent in August, the European Union’s statistics office said. That’s the biggest annual increase in consumer prices since October 2008.

Deutsche Bank slid 6.8 per cent to €26.32. The bank may lower its target for achieving a record €10 billion in profit this year Handelsblatt reported.

BNP Paribas and Société Générale, France’s biggest banks, fell 3.5 per cent to €30.05 and 5.1 per cent to €20, respectively.

Metro, Germany’s largest retailer, dropped 4.3 per cent to €31.93.

Philips slumped 4.1 per cent to €13.55 in Amsterdam trading after HSBC cut its earnings estimates by 20 per cent to 30 per cent for the next two years.

Swatch slid 7 per cent to 302.30 Swiss francs. The world’s largest watchmaker makes 33 per cent of its revenue in greater China, Bloomberg data shows.

Burberry, the UK’s largest luxury-goods maker, lost 2.3 per cent to 1,174p. The company makes 33 per cent of its revenue in the Asia Pacific region.

Bayerische Motoren Werke and Daimler, makers of luxury cars, led declines in European automakers as the industry posted the worst performance of all 19 groups in the Stoxx 600.

BMW slid 5.3 per cent to €49.97 while Daimler fell 3.4 per cent to €33.63. Daimler sells 10 per cent of its vehicles in China.

Lundin Petroleum advanced 32 per cent to 117.60 kronor. – (Bloomberg)