ROME: European stocks plunged Monday, joining in a selloff in global equities spurred by worries that China’s economy is slowing down more than anticipated.
Stoxx Europe 600 SXXP, -5.33% dropped 5.3% to close at 342.01, handing the pan-European benchmark its biggest one-day percentage loss since December 2008. Only a few components moved higher in the index, with Spanish renewable-energy Abengoa SA ABG.P, +3.34% among the advancers as it closed up 4.8%.
All major European stock indexes were in the red, helping to push the Stoxx 600 further into a correction as it is now down 17% from its all-time high, hit on April 15. Last week, the index logged its worst week in four years, with declines heavily kicked off after Chinese factory activity fell to a six-and-a-half year low in August, despite Beijing’s efforts to stimulate growth.
Chinese stocks were mauled overnight, losing their gains for 2015, as Beijing failed to take expected action over the weekend to provide more support for the financial system. The Shanghai Composite SHCOMP, -4.33% tumbled 8.5% and in Hong Kong, the Hang Seng Index HSI, +1.62% slid 4.8%. Read: How the market carnage is deepening, in four charts
“Investors should brace for further volatility,” said UBS Global Chief Investment Officer Mark Haefele in a note to clients dated Aug. 23 and released on Monday.
Investors have been “on high alert” over growth in China since Beijing devalued its currency earlier this month, he added. “But we expect this bout of risk aversion to pass, with equities in developed markets resuming their upward trend.”
