European stocks fell sharply as concerns global growth may be slowed as China moves to rein in inflation and slow its powerful economy.
Trade in European equity markets was thin, however, as key players in the UK – due to public holidays – were missing. This left the markets prone to volatile moves and the FTSE Eurofirst 300 index was down 0.9 per cent to 1,137.49 in late morning trade.
In Germany, the biggest faller was BMW. The luxury car group was down 6.2 per cent to €59.32, while Porschelost 4.9 per cent to €59.40, Volkswagen slid 4.7 per cent to €122.10 and Daimler shed 4.7 per cent to €51.55.
These heavyweight losses ensured a negative session on the Xetra Dax, which fell 1.2 per cent to 6,970.73.
In France, Peugeot lost 2.1 per cent to €28.84, while rival carmaker Renault lost 0.7 per cent to €43.44.
Carmakers fell after China also moved to limit the number of new vehicle licenses it issues in Beijing next year to 240,000 – about a third of last year’s total – as it strives to reduce the effects of relentless traffic in what has been ranked as the world’s most congested city.
December has, however, been a good month for equity markets, with the Eurofirst 300 up 7.5 per cent in the month to date, as investors put faith in efforts to rescue economies at the periphery of the eurozone. Banks have been among the stocks to benefit from the rally, but were down on Monday as the China rate hike prompted investors to take profits.
Spain, which is fast becoming the focus of investor suspicion after multiple credit downgrades for Ireland and Portugal in recent weeks, was the worst performing of the eurozone’s market indices, down 2.1 per cent to 9,899.