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Europe midday: Stocks extend drops amid growth fears and tensions in Hong Kong

Tue 13 August 2019 11:29 | A A A

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(Sharecast News) - Stocks across the Continent were under selling pressure again on Tuesday, amid continued worries of weaker global growth and after flights out of Hong Kong were suspended for a second day, stoking concerns that a crackdown on protesters in the city might be nearer.

On the back of the most recent escalation in trade tensions between the US and China, Germany's ZEW institute said that financial experts' assessment of the outlook for the German economy had worsened in August to near the lows hit during the great financial crisis in 2008 or the euro area debt crisis in 2011.

"It seems as if investors are anticipating chaos-a U.S.-Sino currency war, Brexit etc-or at least ascribing a very high probability to an accident," said Pantheon Macroeconomics's Claus Vistesen.

Similarly, Bank of America-Merrill Lynch's fund manager survey for August, the results of which were also published on Tuesday, showed that investors had turned the most bullish on interest rates since 2008 with the smallest proportion of managers since 2002 now saying that the euro was "cheap".

As of 115 BST, the benchmark Stoxx 600 was down by 0.49% to 368.58, alongside a drop of 0.68% to 11,600.21 for the German Dax, while the FTSE Mibtel was off by 0.44% at 20,174.09.

Regarding the situation in Hong Kong meanwhile, Neil Wilson, chief market analyst at Markets.com, was telling clients: "And we have trouble at Hong Kong airport again - flights are suspended for a second day. If you think this is going to go away, think again. When - and how - does China intervene?"

Against that backdrop, the US dollar was adding 0.09% to 7.0647 against the Chinese currency, the yuan.

In other economic news, Spain's INE revised its estimate for the year-on-year rate of increase in harmonised consumer prices for July lower by one percentage point to 0.6% (consensus: 0.7%), which was unchanged from June's pace.

Over in Germany meanwhile, harmonised CPI was confirmed at up by 1.7% on the year after a reading of 1.5% for June.

Spanish security services outsourcer Prosegur was a top faller amid fears that another populist government in Argentina, where its holding company employs tens of thousands, might trigger a sovereign debt default.

Shares in Henkel retreated after the German consumer goods manufacturer cut its full-year outlook for earnings and sales.

Another German outfit, TUI, however, was trading on the front foot even after it revealed to shareholders that the grounding of its fleet of Boeing 737 Max had triggered a 46.0% drop in third quarter profits.

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