MarketWatch | Stocks and Markets in the News | European Markets at Close Report: Greece, growth fears weigh on European stocks

By Sara Sjolin, MarketWatch 

LONDON (MarketWatch)—European stock markets posted broad-based losses on Monday, as concerns over Greece and Spain mounted and disappointing German data fueled worries about growth in the euro zone. 

The Stoxx Europe 600 index XX:SXXP -0.39%  fell 0.4% to close at 274.70. 

U.S. stocks fell on Wall Street. See: U.S. stocks fall, as Europe progress stalls . 

“Greece has re-entered the list of events that could bring risk-off trading back,” said Morten Kongshaug, chief strategist at Danske Bank. 

“On the event calendar, we’ve seen a bold move by the [European Central Bank] and a very strong move from the [U.S. Federal Reserve], which have been good for risk appetite,” he added. “But it’s uncertain if central banks are ahead of the curve or still lagging behind, meaning that we may see six more months of slowdown before central-bank action will actually help.” 

Shares of Fugro NV NL:FUR +2.08% rose 2.1% after it agreed to sell its geoscience division to CGG Veritas FR:GA -5.25% for 1.2 billion euros ($1.6 billion). Shares of CGG Veritas slumped 5.3%. See: Fugro to sell a division to CGGVeritas for €1.2B. 

 

Rajoy: Spain deserves more credit The Spanish economy will be under close scrutiny this week when it publishes the results of bank stress tests and sets out economic overhauls. 

TNT Express NV NL:TNTE -2.58%  fell 2.6% as the logistics firm said Chief Executive Marie-Christine Lombard will leave the company at the end of September. See: TNT Express CEO steps down; UPS plan unaffected.

Outside the major pan-European index, Mediq NV NL:MEDIQ +49.54% surged 50% after the U.S. buyout firm Advent International Corp. said it would make a €775 million cash offer for the Dutch supplier of pharmaceuticals and medical devices. The offer is a 53% premium over Friday’s closing price. See: U.S. buyout firm Advent to bid $1.01B for Mediq.

Greece, German data in focus

European bank stocks posted some of the biggest losses as worries over Greece intensified.

German magazine Der Spiegel reported Sunday that Greece must close a budget gap of €20 billion, almost double previous estimates, to satisfy conditions for emergency aid. A representative from Greece’s Ministry of Finance denied the reports, however, and said the country is negotiating budget cuts of only €11.5 billion. See: Troika said to estimate Greece budget gap at $26B. 

 

Reuters

There are conflicting reports about the size of Greece’s budget shortfall.

The Athens General Index GR:GD -2.75% tumbled 2.8% to 754.48, with National Bank of Greece SA GR:ETE -5.56% down 5.6%.   

Media reports also pointed to mounting disagreements between German Chancellor Angela Merkel and French President François Hollande over the timetable of implementing a banking union for the euro zone, after both state leaders talked in Ludwigsburg, Germany, on Saturday. Merkel suggested that “quality” is more important than speed.

Data from Germany added to the downbeat trading mood. The Ifo index, a gauge of German business confidence, dipped for a fifth month in September and missed analysts’ expectations. See: Ifo business-confidence index dips for fifth month.

“With other indicators revealing sharp falls in consumer sentiment lately, a recovery in domestic spending seems very unlikely,” analysts at Capital Economics wrote in a note.

“While Germany might have avoided a recession in [the third quarter], it seems like only a matter of time before the economy starts to contract. This will make support for the peripheral economies even more difficult to muster,” they said.

Spain and movers

Focus also remained on Spain ahead of an eventful week for the ailing country with investors speculating if it’ll finally ask for a bailout. See: Spain: What investors need to know.

“The ECB has made its conditionality very clear—that it will not buy any bonds without being asked to,” said Danske Bank’s Kongshaug. 

“That’s why short-term traders, which have basically positioned themselves more neutrally to the euro crisis, are now hesitant to go long in European assets,” he said. “They need more clarity and need to know which side we are [on] of this bailout. If not, the market will show the way for the Spanish administration and test 7% [for 10-year government bond yields] again.” 

Yields on 10-year Spanish government bonds ES:10YR_ESP -0.03%  were down 9 basis points to 5.65%, according to electronic trading platform Tradeweb.

Spain’s Banco Santander SA ES:SAN -1.28%   SAN +0.57%  dropped 1.3%, while BBVA SA ES:BBVA -1.22%   BBVA -0.24%  lost 1.2%. The IBEX 35 index XX:IBEX -1.12%  gave up 1.1% to 8,138.40. 

Germany’s Commerzbank AG DE:CBK -3.58%  slumped 3.7% and Deutsche Bank AG DE:DBK -0.74%   DB -0.77%  fell 0.9%. The DAX 30 index DX:DAX -0.52%  closed 0.5% lower at 7,413.16.

In the U.K., miners were adding the most pressure on the FTSE 100 index UK:UKX -0.24% , which lost 0.2% to 5,838.84. See: Miners drag U.K. stocks lower; banks off. 

 

Anglo American PLC UK:AAL -2.61%  lost 2.6% after Citigroup cut the stock to neutral from buy. Rio Tinto PLC UK:RIO -2.01%   RIO -2.47% AU:RIO -2.41%  gave up 2% and BHP Billiton PLC UK:BLT -0.43% BHP -1.04%   AU:BHP -0.86% slipped 0.4%. Metals prices were lower. 

Among French stocks, steelmaker ArcelorMittal SA FR:MT -2.46%  fell 2.3%. Credit Agricole SA FR:ACA -2.37%  dropped 2.4% and BNP Paribas SA FR:BNP -1.51%  lost 1.5%. 

Oil group Total SA FR:FP -0.61%   TOT +0.11%  rose 0.8% as it raised its annual-average-production-growth target to 3% for the period 2011-2015. The previous target was 2.5%. See: Total lifts annual oil-output-growth target to 3%. 

 

France’s CAC 40 index FR:PX1 -0.95%  fell 1% to 3,497.22. 

Sara Sjolin is a MarketWatch reporter, based in London.