European shares in reverse after shock China data; luxury stocks fall

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LONDON: China’s surprisingly weak trade data brought a four-day rally in European shares to a halt on Monday, with luxury goods and technology stocks leading the drop as investors fretted about slowing global growth and weaker-than-expected earnings.

The pan-European STOXX 600 was down 0.6 per cent at 0833 GMT, reversing some of last week’s gains which saw the index hit a one-month high. The market notched up four straight days of gains, its longest winning streak since November.

Germany’s DAX and France’s CAC 40 were both down 0.7 per cent.

Luxury goods retailers, which rely on appetite for handbags and jewellery from China’s burgeoning middle class, bore the brunt of the selling.

LVMH, Hermes and Gucci owner Kering were among the biggest fallers in Paris, each down between 1.2 and 2 per cent, while Moncler in Milan dropped 1.9 per cent. On average, one third of the luxury sector is exposed to Chinese demand.

Danish jeweler Pandora slumped 7 per cent to the bottom of the STOXX 600. Burberry bucked the trend, garnering strength from a BAML upgrade to neutral from underperform.

UK-listed miners, which are also exposed to the health of the world’s No. 2 economy, were down 0.7 per cent.

Gloom across technology stocks returned after chip designer and Apple supplier Dialog Semiconductor reported fourth-quarter results at the low end of its target range. The shares opened down 2.6 per cent.

Around 75 per cent of Dialog’s business is supplying power-management chips to Apple, which warned in November of slow year-end sales and on Jan. 3 issued its first sales warning in 12 years, blaming weaker iPhone sales in China.

Continental shares were down 0.8 per cent after the auto parts supplier warned of deteriorating conditions in the car sector.

Source: Economic Times