By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European markets fell sharply Friday,
ensuring weekly losses as investors backtracked from global stocks
on valuation concerns.
The Stoxx Europe 600 sloped 1.7% lower to 327.90, and was set
for 3.3% drop on a weekly basis, the first such decline since the
week ended March 14.
In line with much of this week's pattern, European stocks on
Friday fell in the wake of selloffs in Asia and on Wall Street. The
Nikkei 225 closed down 2.4%, its lowest level this year, while the
Nasdaq Composite (RIXF) fell 3.1% as tech and biotech stocks
extended their pullbacks.
Among European tech names, shares of ARM Holdings PLC slumped by
4.9%, Logitech International SA gave up 3.9%, and Infineon
Technologies AG was down 3.4%.
The direction European equities go will soon be a "reflection of
what the S&P [500 index] does next," and the U.S. equity index
has "outperformed by quite some distance an awful lot of the other
European benchmarks over the past four to five years," said Michael
Hewson, market analyst at CMC Markets, in a telephone interview.
"That to me means that the scope for a correction is greater in the
S&P and there will be an inevitable spillover effect into
European markets."
Hewson said he's "not 100% convinced" that a spillover will drag
European benchmarks below their lows of this year and stoke a
sustained sell off in European equities. "But what I do think we
need to see is a shakeout in the S&P 500," he said.
S&P 500 futures (SPX) were down 0.6% on Friday, hit by
premarket losses for J.P. Morgan Chase & Co. (JPM) after the
bank's quarterly profit missed analyst expectations.
Leading decliners on the Stoxx 600 were Norwegian companies Aker
Solutions ASA and Orkla ASA , falling 7.3% and 6.4%, respectively,
as shares of the oil and gas industry services provider and the
conglomerate each traded without dividend rights. Also hit hard,
Thales SA shares slid 3.6% after J.P. Morgan cut its rating on the
French defense-electronics group to neutral from overweight.
U.K.'s FTSE 100 fell 1.2% to 6,559.81 with only six of the
index's components moving higher. Wm. Morrison Supermarkets PLC
gained 1.2%, rival J Sainsbury PLC picked up 0.5%, and metals miner
Fresnillo PLC moved up 0.6%.
Germany's DAX 30 dropped 1.9% to 9,276.58, and France's CAC 40
fell 1.5% to 4,346.79.
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