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02/08/2011 12:00 - European stocks drop to 10-month low

On Tuesday European stocks fell to the lowest level in almost 10 months amid concern that a slowdown in the world’s largest economy is derailing global growth. Asian shares and U.S. index futures declined.

 

European shares extended losses, with mining stocks continuing their decline as worries about the global economic recovery weighed and banks reversing earlier session gains on concerns about the euro zone debt crisis.

 

The FTSEurofirst 300 index of top shares was down 0.8 percent, while the STOXX Europe 600 Basic Resources index fell 2 percent. The Stoxx Europe 600 Index retreated 1 percent in London, the lowest since the 5th October. European stocks became the first major region to enter a so-called correction yesterday, with the Stoxx 600 dropping 10 percent from this year’s highest level as falling Spanish and Italian bonds showed the debt crisis is spreading.

 

Pandora A/S tumbled 66 percent as the Danish jewelry maker posted earnings that missed estimates. Metro AG slid 3.8 percent as Germany’s biggest retailer said operating profit dropped as its Media-Saturn consumer-electronics unit posted the first loss in at least 20 years. Wacker Chemie AG sank 9.8 percent.

 

Wrangling between U.S. lawmakers over raising the nation’s debt ceiling has also fueled investors’ concerns. Congressional leaders voiced confidence the Senate will vote during the day to ratify a U.S. debt-limit compromise after the House voted 269-161 to approve the measure, which boosts the national debt limit enough to fund the government until 2013.

 

Asian stocks fell the most in six weeks after a report showing the slowest U.S. manufacturing growth in two years soured the earnings outlook for Asian exporters. The drop wiped out yesterday’s gains that attended a deal among U.S. lawmakers to raise the country’s debt limit to avoid default.

 

 

This article was compiled by Valletta Fund Management Limited, a member of the BOV Group. Valletta Fund Management, TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000.  Freephone: 80072344. email: infovfm@bov.com Internet address: www.vfm.com.mt. Valletta Fund Management Limited is licensed by the MFSA.