Aug 21 European stocks were seen slumping on Friday, tracking a fall in Asian equity markets and U.S. stock futures, after a survey showed Chinese factories contracted at their fastest pace since the depth of the global financial crisis in 2009.
Financial spreadbetter IG expected Britain’s FTSE 100 to open 144 points lower, or down 2.2 percent, Germany’s DAX to open 325 points lower, or down 3.1 percent, and France’s CAC 40 to open 121 points lower, or down 2.5 percent.
The Caixin/Markit manufacturing index showed activity in China’s factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled. Coming on the heels of weaker-than-expected data in July, it stoked fears of a slowdown in the world’s second-biggest economy.
The pan-European FTSEurofirst 300 closed near its lowest level since February on Thursday, and is down over 7 percent since China devalued its currency last week.
“Global markets are in panic mode as the full scale of China’s slowdown becomes clearer,” Angus Nicholson, market analyst at IG, said in a note.
“The word on everyone’s lips is deflation – poison for equity markets. The phenomenal six-year bull market may finally meet its match in China-induced global deflation. “
In the euro zone, Prime Minister Alexis Tsipras resigned on Thursday, hoping to strengthen his hold on power in snap elections after seven months in office in which he fought Greece’s creditors for a better bailout deal but had to cave in.
COMPANY NEWS
VOLKSWAGEN
Europe’s largest carmaker on Thursday said that average utilization at its Chinese factories will fall as overall production capacity increases with the opening of new plants in the world’s largest car market.
Separately, Two U.S. senators on Thursday called on Japanese auto supplier Takata Corp to immediately recall all vehicles containing the company’s air bags after U.S. safety regulators ordered VW and Takata to provide information.
In addition, South Korea’s LG Electronics Inc will supply Honda Motor Co Ltd and Porsche with in-car displays, a person with direct knowledge of the matter said on Friday, as the firm tries to grow its auto business to counter weak sales at its mainstay television and smartphone units.
METRO
Erich Kellerhals is looking for partners including private equity to win control over Media-Saturn, sources told Reuters. Metro said it had not received any offers for its MSH stake.
MAJOR MACROECONOMIC DATA/EVENTS (GMT) :
0600 DE Gfk Consumer Sentiment
0700 FR Markit Flash PMI
0730 DE Markit Flash PMI
0800 EZ Markit Flash PMI
0830 GB PSNB
1230 CA CPI Inflation
1345 US Markit Manufacturing PMI
1400 EZ Consumer Confidence
1430 US ECRI Weekly
—————————————————————————— > GLOBAL MARKETS-Stocks, oil tumble after grim China PMI > U.S. stock futures tumble to 6-month low after weak China PMI > Nikkei drops to 6-week low on Wall Street fall, China worries > TREASURIES-Yields fall, Fed rate hike in Sept seen less likely > FOREX-Aussie hit by weak China PMI; risk aversion lifts euro > Gold near 5-week top as China worries spark safe-haven demand > LME copper targets seventh weekly loss as China factories slow > Oil on track for longest weekly losing streak in 29 years (Reporting by Alistair Smout)
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