Markets: News  

China data take toll on European stocks

MADRID (MarketWatch) -- Weaker-than-expected data on Chinese exports Friday triggered selling across European markets, with the main benchmark halting a five-day winning streak, as oil, drug and food stocks led the way south.

The Stoxx Europe 600 index (SXXP) fell 0.1% to 269.88, after closing up in the prior session. Markets found support Thursday from China data that opened the door to more monetary policy and well-received results from major blue chips.

For the week, Europe's benchmark closed up 1.6%.

However, a downside surprise in China trade data Friday rattled Asia and Europe stocks. Data showed an unexpected shrinking of the July trade surplus, with exports barely budging and imports also rising at a smaller rate. U.S. stock markets also traded weaker Friday.

Analysts are now starting to worry about the potential effectiveness of any monetary policy easing that markets are widely expecting in September. See: China July trade surplus unexpectedly shrinks.

"The swath of disappointing data [have] confirmed how difficult it is to turn China's economy around and while we can expect stimulus measures to be introduced, questions remain as to how effective they will be in the short term," said Rebecca O'Keefe, head of investment at Interactive Investor, in emailed comments.

Still, she said it would take a big fall to derail European stocks from a string of weekly gains.

"However, it remains to be seen whether the markets can sustain this rally if promises made on Europe fail to materialize," said O'Keefe. "Summer holiday and Olympic euphoria aside, we need some follow through to hold on to these higher levels."

Markets also continue to wait for some developments on the euro-zone crisis, expected to be thin on the ground until September, with many policy makers away on summer vacations. Doubt is beginning to creep into the marketplace that the European Central Bank will take action soon enough to dent borrowing costs for countries such as Spain and Italy.

Peripheral markets such as Spain's IBEX 35 index (IBEX) fell 0.9% to 7,047.7 as shares of Telefonica SA(TEF) (TEF) fell 1%.

Retailer Inditex SA (ITX) dropped 1.8%, tracking rival and Stoxx 600 heavyweight Hennes & Mauritz AB (HMB) which fell 1%. China is an important market for both companies.

Energy stumbles

Energy-related stocks were among the weakest in Europe Friday as crude prices tumbled after the International Energy Agency warned of weak global demand. Read: Oil futures tumble on global demand concerns

French oil major Total SA(FP) down 0.1%, which helped knock 0.6% off the French CAC 40 index (PX1) , at 3,435.62.

Food-related stocks also fell across Europe, with French heavyweights Carrefour SA(CA) and Danone SA(BN) down 1.6% and 2%, respectively.

Those losses came as food major Nestle SA(NESN) (NSRGY) gave back a chunk of prior-day 2%-plus gains fueled by well-received earnings results. Shares of the Stoxx 600 heavyweight fell 1%.

Banks were another sector taking a hit Friday, with shares of COMMERZBANK AG(CBK) sliding 3.2% a day after a profit warning and disappointing results that knocked over 4% off shares. Analysts at Deutsche Bank cut shares to hold from buy, saying the bank needs to come up with new cost savings.

The German DAX 30 index (DAX) fell 0.3% to 6,944.56, as several key stocks were under pressure. The DAX was set to mark its third-straight losing session on Friday. Heavyweight drug and chemical company Bayer AG (BAYN) fell 0.6% amid broader weakness for the sector.

On the upside in Frankfurt, shares of ThyssenKrupp AG(TKA) rose 5.1% after the steelmaker reiterated its full-year guidance and reported third-quarter earnings that beat expectations.

Away from the main index Hannover Re AG (HNR1) fell 2.3% after the reinsurer said second-quarter profit fell 13% owing to a sharply higher tax rate and lower contributions from investments.

In London, the FTSE 100 index (UKX) fell 0.1% to 5,847.11, pressured by a 0.3% drop for miner Rio Tinto PLC(RIO) .

Shares of heavyweight banking major Standard Chartered PLC(STAN) (2888) , which is embroiled in a battle with the New York state financial regulator over charges it laundered money for Iran, also added pressure. It stepped back from recent gains to drop 2.7%.

Keeping the FTSE from falling any further, shares of Barclays PLC(BARC) (BCS) rose 2.5%, after the bank said Thursday that David Walker will become chairman. He will succeed Marcus Agius who is stepping down in the wake of the Libor-fixing scandal.