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Market Update

European Markets Drop 2% on Banking Sector Health Worries

Author: Lucy Stoeva
Last Update: 6:53 PM ET February 08 2016

4:00 PM Frankfurt, Germany – European stocks fell sharply on Monday on the fresh worries of the banking sector health and concerns over the global economic growth. Eurobank Ergasias in Greece plunged 29.2%. Gold miner Randgold Resources jumped 13% on the dividend hike and exploration progress.

European markets closed sharply lower on Monday as worries over the banking sector added to concerns about the global economy.

The sell-off in the banking sector followed disappointing earnings of key players amid negative interest rates, high debt levels and relatively weak economic activity.

In Germany, Deutsche Bank AG plummeted 9.5% and in France, BNP Paribas lost 5.5%. Italian banks extended losses and Banca Monte dei Paschi di Siena SpA fell 12%.

Eurobank Ergasias in Greece plunged 29% on the worries that the company may face capital shortfall.

In China, January foreign-exchange reserves fell to the lowest level in three years, raising concerns about the flight of capital away from the market.

Oil prices continued to decline as negotiations between members of the OPEC and non-OPEC producers did not move forwards.

Brent crude oil futures fell 1.6% to $33.52, while West Texas Intermediate crude oil lost 2.6% to $30.10.

Among oil companies, Saipem tumbled 25.3%, Seadrill erased 14.5%, and Tullow Oil lost 6%.

In London, FTSE 100 index fell 158.7, or 2.71%, to 5,689.36 and in Frankfurt, the DAX index dropped 306.87 or 3.30%, to 8,979.36.

In Paris, the CAC 40 index plummeted 134.36, or 3.20%, to 4,066.31.

In Sweden, Assa Abloy AB tumbled 9.76% to 150.7 Swedish kronor after the world’s biggest lock maker reported weaker demand in many emerging markets.

Operating profit grew to 3.04 billion Swedish kronor from 2.68 billion a year ago.

Organic growth expanded to 5%, compared with 3% a year earlier, due to efficiency improvements.

Imagination Technologies Group Plc inched down 1.9% 129.25 pence after the long-time CEO, Sir Hossein Yassaie, stepped down.

In Denmark, shares of Novozymes AS fell 4.27% to 273.30 Danish kroner after the enzyme maker said it would divide the company in three units to boost innovation and flexibility in changing market conditions.

Randgold Resources Ltd jumped 13.21% to 6,000 pence after the West African gold miner increased its dividend and said it was making progress in its exploration efforts.

Pre-tax profit in 2015 was $260 million, down from $353 million last year.

Last year’s decline in gold prices was partially offset by production growth to a record of 1.21 million ounces at an average cost of $679 an ounce.

In 2016, the price of gold has been increasing as investors are searching safer investments.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc