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European stocks retreat amid concern over central bank policy

Sep 12 2016 10:17
Alan Soughley and Camila Russo

Frankfurt - European stocks headed for their biggest decline since Brexit amid investor concern about central banks’ willingness to continue supporting economic growth with loose monetary policy.

The Stoxx Europe 600 Index lost 1.9% to 339.02 at 8:17 a.m. in London. Almost all western-European stock markets and industries dropped. Germany’s DAX Index posted the biggest decline, sliding 2.3% as EON SE and Linde fell.

The optimism that central banks would maintain or augment stimulus measures started to fade last week after European Central Bank President Mario Draghi surprised markets by playing down the prospect of further aid, while a day later Federal Reserve Bank of Boston President Eric Rosengren warned that the US economy could overheat if policy makers wait too long to tighten.

Miners posted the worst performance of the 19 industry groups on the Stoxx 600 today as commodity prices dropped. Energy companies slid as oil extended declines after US producers increased drilling.

Among stocks moving on corporate news today:

Linde tumbled 7% after saying it terminated talks for a combination with Praxair that would have created the world’s largest supplier of industrial gases.  EON slid 13% after spinning off its Uniper unit.  

RWE fell 2.6% after confirming plans for an initial public offering of Innogy shares in the fourth quarter.

SVG Capital jumped 15% after HarbourVest Global Private Equity offered to buy it for about £1bn in cash.

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