European shares fall to a two-month low

European shares fell for a third straight session on yeterday, touching a two-month low, with retailers and tech firms under pressure even as commodity shares stabilised.

The pan-European FTSEurofirst 300 fell 0.3 per cent to 1,426.02, having touched its lowest level since mid-October. It is down 2.2 per cent this week.

Volatility, a crude measure of investor fear, rose to hit its highest level in nearly a month.
The FTSEurofirst 300 is down around 6 per cent in December, falling after the European Central Bank disappointed markets with only limited stimulus measures earlier this month.

“We think investors are going into 2016 with very little faith in the future,” strategists at Barclays said in a note.
“Overseas inflows have moderated considerably… (and) risk appetite is depressed.”

Sports retailer Sports Direct was the worst hit on the STOXX Europe 600 after it missed forecasts with its first-half results. It was down 8 per cent.

Inditex also slipped 1.7 per cent despite seeing a strong start to Christmas trading, with shares richly valued. The firm’s gross margin also slipped.

Some tech shares were also under pressure. Germany’s Aixtron , which provides equipment for the semiconductor industry, fell 40 per cent after China’s Sanan Optoelectronics slashed its order for new-generation tools.

That sent shares of other semiconductor stocks, such as ASML and Infineon, slightly lower.

Among gainers, Glencore rose 10 per cent after the miner and commodities trader announced a cost-cutting programme and new debt reduction forecasts.

Basic resources stocks rose 2.3 per cent, the best performing sector, boosted by Glencore and by stabilising metals prices. The sector has been at the heart of most of the recent market weakness.

French utility EDF rose 9.6 per cent after it raised its 2015 earnings outlook slightly, even though it said it would book additional charges this year of about 2.3 billion euros ($2.5 bln) after an asset review.

Chemical maker Syngenta rose 5.2 per cent after a potential $130 billion merger of Dow Chemical Co and DuPont triggered talk there could be a renewed flurry of takeover bids for European rivals.

Syngenta’s stock was boosted after Benzinga reported that ChemChina was said to be considering a purchase of the company.