EUROPE MARKETS: European Stocks Head For Biggest Loss Since July

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11/09/2017 | 05:02 pm


By Carla Mozee and Sara Sjolin, MarketWatch



Vestas shares hit hard after results; EU growth outlook lifted



Europe's benchmark stock index headed for its biggest daily loss in almost four months on Thursday, as an early selloff gathered pace in the afternoon after U.S. stocks opened with losses.



There were big moves in stock price for certain companies reporting results, including for Burberry Group PLC, whose shares tumbled by the most in five years.



What markets are doing: The Stoxx Europe 600 was down 1.1% at 390.29, setting the benchmark on track for its biggest loss since 18, according to FactSet data. On Wednesday, the regional benchmark slipped less than 0.1% .



"U.S. future were coming under more pressure than what we've become accustomed to heading into the open and I think this may have spread to other markets with investors possibly doubting that the usual 'buy the dip' mentality would kick in," said Craig Erlam, senior market analyst at Oanda, in emailed comments.



"Ultimately, markets are meant to see corrections along the way and this hasn't been the case really throughout the rally recently. As it stands, I don't think the moves are cause for alarm," he added.



Germany's DAX 30 index slumped 1.3% to 13,213.82, while France's CAC 40 gave up 1.1% to 5,413.



The U.K.'s FTSE 100 dropped 0.5% 7,491.67.



The euro traded at $1.1625, up from $1.1596 late Wednesday in New York.



What's moving markets: Investors continued to juggle corporate earnings reports. Shares that were deeply punished included Burberry Group and Vestas Wind Systems A/S. But German lender Commerzbank AG and AstraZeneca PLC were among those whose shares advanced.



Looking at the 78% of companies on the Stoxx 600 that have delivered results, growth in per-share earnings has slowed, according to research from Deutsche Bank. Growth was at 7.6% in the third quarter, compared with 26% and 18% in the first and second quarters, respectively.



In addition, the ratio of companies beating earnings expectations is at 51%, the lowest since the fourth quarter of 2015, the bank's analysts noted. Euro strength "has offset the positive impact from a strong growth backdrop during the quarter," said Sebastian Raedler, head of European equity strategy at Deutsche Bank.



Exporters saw their beat ratio drop below 50% for the first time since 2016, in contrast to eurozone companies with high domestic revenues, which managed to beat expectations "comfortably," he said.



Stock movers: Burberry shares (>> Burberry Group) (>> Burberry Group) slid 9.2%, driving toward their worst session since September 2012, according to FactSet data, after the British company warned it doesn't expect sales growth until fiscal 2021 .



Vestas Wind Systems A/S shares (>> Vestas Wind Systems) plunged 19% as the Danish wind-turbine maker cut a full-year margin forecast as it faces "a market that is seeing accelerated competition and decreasing profitability." Vestas third-quarter profit and earnings fell short of expectations.



Shares of Commerzbank AG (>> Commerzbank) popped up 2.6% as Germany's second-largest bank said it expects to post a small profit for the full year . The company swung to a profit in the third quarter of EUR472 million euros, but that was less than an consensus estimate of EUR487 million.



AstraZeneca PLC (>> AstraZeneca) (>> AstraZeneca) slipped 0.3% even as the drugmaker said third-quarter operating profit rose12% to $1.15 billion , boosted by a one-off tax benefit. But product sales fell 3% stemming from the loss of the company's exclusivity on Crestor and Seroquel.



Hikma Pharmaceuticals PLC (>> Hikma Pharmaceuticals) (>> Hikma Pharmaceuticals) was knocked down 5.6% as the company cut its guidance for its generics unit for a third time.



Economic data: The eurozone economy in 2017 is on track to grow at its fastest rate in a decade , bolstered by robust job creation, rising investment and decreasing debt, the European Commission said Thursday. The EU body expects gross domestic product to expand by 2.2% in 2017, up from its 1.7% forecast in the spring.



France's economy is expected to grow 0.5% in the fourth quarter, according to a survey by the Bank of France. That would continue a run of stronger growth over the past year for the eurozone's second-largest economy.



German exports and imports declined at the end of the third quarter , according to data from the Destatis statistics agency. Exports declined by 0.4% in September on the month in adjusted terms and imports fell 1%



The Royal Institution of Chartered Surveyors said its survey on U.K. house prices showed slowing growth in October compared with September. Its monthly house price balance dropped 5 points, to plus 1 in October, below a Wall Street Journal consensus estimate of a reading of plus 3.





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