ROME: European stock markets were yanked back into the red Tuesday, with miners and energy-related shares led the way lower.
The Stoxx Europe 600 index SXXP, -1.81% lost 1.8% to end at 365.75, marking its lowest close since Oct. 21, according to FactSet data. The pan-European index on Monday had posted a 0.5% gain that broke a four-day losing streak.
Resource rout: The U.S. oil benchmark CLF6, +1.89% on Tuesday slumped under $37 a barrel while Brent crude LCOF6, +1.34% undercut the $40 mark, although they both recently traded back in positive territory.
Oil and gas stocks SXEP, -1.39% struggled, but managed to pare some losses. In the oil equipment and services group, Norway’s Seadrill Ltd. SDRL, -9.45% finished 9.5% lower and Saipem SpA SPM, -2.57% moved 2.6% lower in Milan. Among oil producers, BG Group PLC BG., -2.20% ended 0.1% higher in London, Eni SpA ENI, -2.53% dropped 2.5% in Milan and Spain’s Repsol SA REP, -1.98% gave up 2%.
Oil prices have remained under pressure after the Organization of the Petroleum Exporting Countries decided on Friday not to cut its production, indicating no quick end to a persistent supply glut that started sending prices sharply lower in the summer of 2014.
“Further weakness in commodity prices is unsettling investors during this historically very bullish month for equity markets,” said Simon Smith, chief economist at FxPro, in a note.
Investor confidence was sapped early Tuesday by Chinese data showing exports fell for a fifth straight month in November. The data are seen as the latest sign of slowing growth in the world’s second-largest economy as weak global demand continues to weigh on the country’s important manufacturing sector. Asian shares closed lower after the disappointing data.
Mining companies were hard hit by the trade report. Shares in BHP Billiton PLC BLT, -5.54% BHP, -4.19% BHP, +1.58% closed 5.5% lower, while Rio Tinto PLC RIO, -8.37% RIO, -8.09% RIO, -0.83% ended down 8.4%.
Iron-ore heavyweight Rio Tinto on Tuesday lowered its forecast on what it will spend on major projects next year.
Standing out among miners was Anglo American PLC AAL, -12.29% as shares tumbled 12% after the miner suspended dividends and announced a major restructuring of its business. Other miners may be forced to make similar moves, warned Alastair McCaig, market analyst at IG.
“Where one goes, others will follow and the possibility that BHP Billiton or Rio Tinto might be forced into similar action now looks increasingly likely,” he said in emailed comments.
