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Jul 03, 2013, 04.51 PM IST | Source: Investing.com

European stocks remain sharply lower in cautious trade; Dax down 1.64%

European stocks remain sharply lower in cautious trade; Dax down 1.64%

Investing.com - European stocks remained sharply lower on Wednesday, as Chinese service sector data added to concern's over a slowdown in the world's second largest economy, while ongoing uncertainty over the future of the Federal Reserve's stimulus program also weighed.

During European afternoon trade, the EURO STOXX 50 plunged 2.02%, France's CAC 40 retreated 1.68%, while Germany's DAX 30 plummeted 1.64%.

Markets were jittery after a government report showed that China's non-manufacturing purchasing managers' index inched down to 53.9 in June from 54.3 in May.

In addition, market sentiment was hit by reports that more Portuguese government ministers may resign, after the country's finance minister and foreign minister dramatically stepped down this week amid public opposition to austerity measures.

Meanwhile, investors were looking ahead to a string of U.S. economic reports later in the day, as well as Friday's U.S. nonfarm payrolls data, for further clues on when the Fed may decide to unwind its USD85 billion-a-month stimulus program.

Financial stocks remained broadly lower, as French lenders BNP Paribas and Societe Generale plunged 3.19% and 3.48%, while Germany's Deutsche Bank plummeted 3.15%.

Peripheral lenders added to losses, with Spanish banks BBVA and Banco Santander dove 3.69% and 4.35% respectively, while Italy's Intesa Sanpaolo and Unicredit retreated 2.70% and 3.13%.

Elsewhere, Air France, Europe's largest airline, and Deutsche Lufthansa sank 2.36% and 3.46% respectively, as oil prices rallied over 1%.

In London, commodity-heavy FTSE 100 tumbled 1.63%, weighed by sharp losses in mining stocks, even as data showed that service sector activity in the U.K. expanded at the fastest pace since March 2011 in June.

Mining giants Rio Tinto and BHP Billiton plunged 2.48% and 2.92%, while Anglo American dove 4.63% and Polymetal tumbled 1.50%.

U.K. lenders also remained sharply lower, as shares on Lloyds Banking lost 1.08% and the Royal Bank of Scotland slumped 2.16%, while HSBC Holdings and Barclays retreated 2.95% and 3.31% respectively.

Standard & Poor's cut its long-term counterparty credit ratings for Barclays, as well as Deutsche Bank and Credit Suisse, to A from A+, saying new rules and "uncertain market conditions" threaten their business.

In the U.S., equity markets pointed to a lower open. The Dow Jones Industrial Average futures pointed to a 0.51% decline, S&P 500 futures signaled a 0.55% drop, while the Nasdaq 100 futures indicated a 0.63% loss.

Also Wednesday, official data showed that euro zone retail sales rose 1% in May, outstripping expectations for a 0.2% gain.

Later in the day, the U.S. was to release the ADP report on nonfarm payrolls, as well as the weekly government report on initial jobless claims one day ahead of schedule, and data on the trade balance.


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