1. European shares retreat as miners, Volkswagen slump

European shares retreat as miners, Volkswagen slump

European equities retreated on Tuesday after strong gains in the previous session, with basic resources companies facing a heavy sell-off after copper prices fell sharply on concerns about a global surplus of the industrial metal.

By: | London | Published: September 22, 2015 2:46 PM
european stock market

European equities retreated on Tuesday after strong gains in the previous session, with basic resources companies facing a heavy sell-off after copper prices fell sharply on concerns about a global surplus of the industrial metal. (Reuters)

European equities retreated on Tuesday after strong gains in the previous session, with basic resources companies facing a heavy sell-off after copper prices fell sharply on concerns about a global surplus of the industrial metal.

Shares in Volkswagen fell more than 5 percent, after slumping nearly 19 percent in the previous session, after an invesigation into possible cheating over emissions tests spread to Asia.

The STOXX Europe 600 Basic Resources index dropped 4 percent, the top sectoral faller, dragged down by a 3.8 to 9.6 percent fall in Rio Tinto, BHP Billiton, Glencore, Anglo American and Antofagasta .

“It’s a continuation of the negative trend for basic resources companies as we have a high degree of uncertainty regarding emerging market economies. We have seen some negative earnings revisions for the sector in the past weeks,” Christian Stocker, equity strategist at UniCredit in Munich, said.

“If China manufacturing numbers come in better than expected tomorrow, we could see a rebound in mining stocks for some days, but the sector’s medium-term outlook remains bearish.”

The European mining index has slumped about 25 percent so far this year mainly on concerns about the pace of economic growth in China, the world’s biggest metals consumer. Prices of major industrial metals such as copper, aluminium and nickel have fallen sharply this year.

Outokumpu shares fell 14.5 percent after Europe’s largest stainless steel maker warned that its quarterly loss will be deeper than expected, citing weak demand from distributors amid high stock levels and low nickel prices.

The FTSEurofirst 300 index of top European shares was down 1.6 percent at 1,388.52 points, a day after closing 1 percent higher. The benchmark index has been hovering within a 75-point range this month. It broadly traded in a 170-point band in July and August.

Shares in Volkswagen fell 5.5 percent after South Korea said it would investigate three of its diesel models. Lawmakers on a panel in the U.S. House of Representatives also planned to hold a hearing on its emissions from diesel vehicles in coming weeks.

Volkswagen shares plunged 19 percent on Monday after the U.S. Environmental Protection Agency said the world’s biggest carmaker by sales used software that deceived regulators measuring toxic emissions and could face penalties of up to $18 billion.

“While there is no doubt that Volkswagen will be able to overcome this in the long-term, the main questions still will have to be answered like how much will be the total monetary cost of the fallout and if VW CEO ( Martin) Winterkorn will be able to hold on to his job,” Markus Huber, senior analyst at Peregrine & Black, said.

  1. H
    Harry Potter
    Sep 22, 2015 at 5:25 pm
    CAUTION – Big Danger Ahead - LnT top-bres were on selling spree, Chairman Mr Naik sold his LnT shares (Rs 1200 apiece) worth 70 crores in 20 days - March 2014. Post Q1-2014 results LnT plunged by 8 %, biggest intra-day decline since July 2009. Post Q2 results LnT share plummeted from high of 1673 to low of 1450 (17 Dec, 2014). Post Q3 – 2014 results another big intra-day fall of 7.44 per cent. Post Q1 – 2015 tumbled by 5 per cent in early hours trade, Q1 profit tanked 37 per cent. Average of lows of last 12 years (Jan to Dec, 2004 till 2012) is Rs 622. Average of highs of last 12 years is Rs 1124. Averages to Rs 875 apiece. Closed today at 1485 from all-time and 3 month peak of 1879. Inherent malignancies – Hydrocarbon and Ship Building losses of Rs 900 cr each, Hyderabad Metro cost overruns Rs 4k crores, Rs 5k crores stagnating investment in Defence. Aging CXO-MD potion of septuagenarians, leading the pack 73 yrs old Chairman Mr Naik completed 50 yrs with LnT as Paid Employee. Post Q2-2015 results - 3 year low of 722 or 6 year low of 386? State owned LIC/UTI are biggest stakeholders at LnT. PM Mr Modi, should intervene to fix retirement age at LnT from SCANDALOUS 75 to 60 - ASAP!!
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