EUROPE MARKETS: European Stocks Log Worst Session In 2 1/2 -years On Slumping Oil Prices, Huawei Fallout

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12/06/2018 | 09:29 pm

By Anneken Tappe, MarketWatch , Emily Horton

Germany's Dax enters bear market

European stocks ended sharply lower on Thursday, marking their worst one-day performance since June 2016, amid slumping oil prices, concerns about global economic growth and the arrest of a high-profile Huawei executive aggravating the resurfaced U.S.-China trade-war fears.

Banking, oil and technology stocks led the decliners.

What are markets doing?

The Stoxx Europe 600 closed down 3.1% at 343.31, having logged its largest one-day point and percentage decline since June 27, 2016, according to Dow Jones Market Data. The stock index ended down 1.2% on Wednesday.

Germany's DAX 30 closed 3.5% lower at 389.26. The benchmark hit a fresh 52-week low and was off 20.3% from its most recent peak in January, meeting the widely used definition for a bear market.

France's CAC 40 closed 3.3% lower at 163.91, and the U.K.'s FTSE 100 finished off 3.2% at 6,704.05.

Italy's FTSE MIB Italy index fell 3.5% to end at 18,643.83.

The euro was stronger versus the U.S. dollar, last fetching $1.1385, up from $1.1344 late Thursday in New York.The British pound was up $1.2786, up from $1.2735.

What is driving the market?

Global stocks suffered on Thursday after the arrest of Meng Wanzhou , chief financial officer of Chinese telecom giant Huawei Technologies, in Canada by request of the U.S. over violating Iran sanctions. Chinese authorities in turn demanded her release .

The arrest hurt risk appetite across financial markets, as investors worried about the likelihood of the U.S. and China resolving their trade conflict amid the news.

Elsewhere, a two-day OPEC meeting kicked off, and oil prices sunk amid no signs of a deal to cut production during the European trading day. After hours, OPEC agreed a preliminary pact to cut output.

In Europe, Italy was due to make the final cost analysis of its scandal-ridden budget. Deputy Prime Minister Luigi di Maio said Thursday that the main budget items will cost less than expected and that Brussels cared most about curbing Italy's debt burden, according to Reuters (

The European Commission sent Rome back to the drawing board when it was first submitted, after the government spending was deemed as too high and potentially in violation of the European Stability and Growth Pact.

What stocks are active?

Heavyweight banking stocks were among the biggest losers on Thursday, with HSBC Holdings was down 3.6% at the close. Lloyds Banking Group finished 2.7% lower.

Tech stocks fell sharply, with Capgemini finished 6.4% lower.

Among resource stocks, steelmaker ArcelorMittal finished 5.9% lower, and oil stocks were under pressure. Total SA ended the session down by 2.9%, BP closed 4.5% lower and Royal Dutch Shell finished with a 4.5% loss.

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