European shares fell to near six-month lows amid a global selloff in equities on fears of a slowdown in US economic growth, with only a handful of stocks trading in the green.
The pan-European STOXX 600 index was down 2.2 per cent to 487.15 points, its lowest since Feb. 14, by 8:27 GMT.
The Euro STOXX volatility index jumped 5.7 points to 30.26, its highest since March 2023.
Fears that the U.S. could be heading towards a recession have sent investors dashing away from risk assets. Japan’s Nikkei closed 13 per cent lower.
Germany’s DAX, France’s CAC 40, Britain’s FTSE and Spain’s IBEX 35 all fell more than 2 per cent.
“You don’t get the Nikkei falling by its largest amount in nearly 40 years without some kind of repercussions across European markets,” Chris Beauchamp, chief market analyst at IG Group said.
“These things don’t usually stop on a dime, it takes a few days to sort out… but the initial panic appears to be over.”
Energy stocks took the most hit, falling 3.4 per cent after oil prices dropped 1 per cent as U.S. recession fears offset supply worries in Middle East.
Financial shares were also hit. Banks lost 3 per cent, financials services shed 2.8 per cent while the tech sector slipped 2.1 per cent.
Investors will get a read on U.S. employment in the service sector from the ISM non-manufacturing survey later in the day.
Last week, a worryingly weak July payrolls report sparked investor worries about the health of the U.S. economy, spurring a risk-off sentiment globally.
The STOXX 600 saw its worst week in nearly 10 months on Friday and fell below the 500-mark for the first time since April 15.
Markets see a 78 per cent chance of a 50-basis-point cut by the Federal Reserve on Sept. 18, while traders expect a second cut by the European Central Bank on Sept. 12.
On the data front, growth in euro zone business activity stalled last month – Purchasing Managers’ Index for the currency union fell to 50.2 in July from 50.9 in June.
Growth in Germany’s services sector slowed for the second consecutive month in July.
Among individual stocks, GaldermaGALD.S gained 6.7 per cent after L’Oreal OREP.PA said it would acquire a 10 per cent stake in the Swiss skincare firm from a group of major shareholders.
OCI Global jumped 10.3 per cent after Woodside Energy WDS.AX said it would acquire the Dutch chemicals maker’s clean ammonia project in Texas for $2.35 billion.
