[T.S.R:16575] European Auto Stocks See Red, As Monetary Intervention Could Stifle Demand From China For Cars & Commodities

European stock markets were weaker on Monday in thin, volatile trading, with auto stocks driving a selloff after a weekend rate hike from China.

The Stoxx Europe 600 index fell 0.7% to 279.47, breaking a string of gains. Most markets in Europe were closed on Friday ahead of Christmas. London markets will be closed until Wednesday. 

 

In focus for Monday was the quarter-point hike in China's key lending and deposit rates, the second time it has increased in 10 weeks.

Some analysts said the hike could mean Beijing officials' efforts to slow the economy in 2010 have had only a limited impact and now they were stepping up those efforts. See China's hike signals no more soft touch.

 

China stocks at first seemed to take the hike in stride, moving higher, but then gave up the gains and turned sharply south, with the Shanghai Composite losing nearly 2%. U.S. stock futures indicated losses were looming for Wall Street as investors returned from the long Christmas weekend.

 

In Europe, with no corporate or economic news to focus on, markets followed Asia's lead. Volumes remained thin with many traders still away and markets volatile with London out of action.

 

The German DAX 30 index was among European indexes showing the biggest losses, down 1.2% to 6,970.95. With China seemingly eager to slow its economy down, automakers fell as the country is a major market for that industry. On the DAX, BMW AG  fell nearly 5%, Volkswagen AG  slipped 4.5% and Daimler fell 3.9%.  In Paris, the CAC 40 fell 1.1% to 3,856.70, with Peugeot SA  off 2.3%.

 

Banks were also weaker, with Societe Generale and BNP Paribas SA  off 2%. Among peripheral markets, the Spanish IBEX 35 dropped 1.5% to 9,955.60, with market heavyweight Banco Santander SA  down 2% and building group Sacyr-Vallehermoso SA  2.1% lower.

 

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

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