By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Stocks in Spain sank 3% on Friday as a
global selloff continued a second day, intensifying for Europe as
fears over China and emerging markets smacked sentiment.
Banks and drug stocks were the biggest losers, though shares of
Celesio AG were up on buyout news.
Decliners swamped gainers on the Stoxx Europe 600 index , which
tumbled 1.4% to 327.86. The index closed 1% lower to 332.69 on
Thursday for the biggest one-day percentage loss since early
December, while in the U.S., the Dow industrials (DJI) suffered the
worst loss in five weeks.
Shares of Celesio AG jumped more than 5%, the biggest gainer on
the main European index. On Thursday, U.S. drug distribution group
McKesson Corp. (MCK) said it had agreement from German conglomerate
Franz Haniel & Cie, a major shareholder in Celesio, to sell its
50% stake in the company for 23.50 euros a share. McKesson also
persuaded Elliot Management to release convertible bonds in the
company.
Nokia (NOK) rose 1.3% after analysts at Societe Generale lifted
shares to buy from hold, citing a buying opportunity after
Thursday's 11% share-price fall. Nokia shares fell on disappointing
results, but analysts at SocGen said there was some hope in
upwardly revised guidance for intellectual-property license fees
from EUR500 million to EUR600 million annually, due to higher fees
expected from Microsoft Corp. (MSFT).
Sentiment was worsening as the morning progressed, matched by a
sharp decline for U.S. stock futures. Asia stocks posted sharp
losses overnight, with the Hong Kong Hang Seng index dropping 1.2%
and the Nikkei 225 index losing close to 2%.
"There's a number of reasons why investors are feeling a little
down in the dumps at the moment," said Craig Erlam, market analyst
with Alpari U.K., in a note. "Corporate-earnings season has been
mixed from an investor standpoint, and disappointing from an
economic one. Companies have continued to focus on the bottom-line
growth driven by cost-cutting rather than investment and stronger
revenues, which is what we'll need to see if the recovery is going
to gather pace this year."
The biggest losses were seen in Spain, where the IBEX 35 index
tumbled 2.7% to 9,961.10 with Banco Santander SA (SAN) sinking 2.4%
and BBVA SA (BBVA) tanking 5% amid a currency crisis in Argentina
in which the central bank reportedly gave up its fight to support
the peso. Spain has deep ties to Latin America, and its banks are
particularly active there.
The banking sector fell sharply across Europe, with HSBC
Holdings PLC (HSBC) down 1.5% and Credit Suisse Group AG slid
3%.
Within other indexes, the German DAX 30 fell 1.3% to 9,508.04,
while the FTSE 100 index lost 1% to 6,706.31.
Among other stocks, shares of Sanofi SA (SNY) slid 3% after the
pharmaceutical group was cut to neutral from buy at Citigroup,
where analysts said consensus downgrades are likely, given recent
pipeline/divisional disappointments. Losses for the heavyweight
weighed on the French CAC 40 index , down 1.3% to 4,221.12.
Also in the drug space, shares of Novartis AG (NVS) dropped
1.6%. The company said it would request re-examination of its
serelaxin treatment in acute heart failure for conditional
marketing-authorization in the EU, following a negative opinion
from the European Medicines Agency's Committee for Medical Products
for Human Use.
From Davos and the World Economic Forum on Thursday, Bank of
England Gov. Mark Carney signalled in a television interview that
interest rates won't need to rise immediately despite the
unemployment rate falling to within 0.1 percentage point of the 7%
threshold he previously said would trigger consideration of a
hike.
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