European stocks extend losses on weak data; DAX tumbles 1.94%

Investing.com - European stock markets extended losses on Wednesday, as disappointing euro zone economic data and a weak Spanish debt auction added to concerns over a further slowdown in the single currency bloc, while investors eyed the European Central Bank’s interest rate decision.

During European afternoon trade, the EURO STOXX 50 plummeted 1.36%, France’s CAC 40 tumbled 1.47%, while Germany’s DAX 30 plunged 1.94%.

Market sentiment was hit as the cost of insuring Spain’s debt against default climbed earlier after the country auctioned EUR2.59 billon of government bonds, short of the maximum targeted amount of EUR3.5 billion.

On Tuesday, Spain’s government announced that the country’s public debt will rise to a record 79.8% of gross domestic product this year.

Earlier Wednesday, data confirmed that the euro zone service sector contracted for the sixth time in seven months in March, increasing the likelihood that the economy has entered a technical recession.

Financial stocks remained sharply lower, led by Dutch lender ING Group, down 2.48%. France’s BNP Paribas and Societe Generale also tumbled 1.79% and 0.78% respectively, while German lenders Deutsche Bank and Commerzbank declined 1.87% and 1.30%.

Meanwhile, French group Veolia sank 3.40% on reports it may decide today to take sole control of Coriscan ferry services operator Societe Nationale Maritime Corse Mediterranee.

On the upside, Telecom Italia added 0.57% after Chairman Franco Bernabe said in an interview with Il Sole 24 Ore that the company may consider a spinoff of its network if it allows “a more favorable regulatory framework.”

In London, FTSE 100 retreated 1.26%, after data showed that U.K. house prices rose unexpectedly in March while the country’s service sector expanded more-than-forecast.

U.K. lenders remained broadly lower with shares in Barclays plummeting 3.37% and the Royal Bank of Scotland tumbling 2.79%, while Lloyds Banking and HSBC Holdings declined 1.42% and 0.38%.

Earlier in the day, the Royal Bank of Scotland reportedly pulled a USD207 million sale of bonds backed by its own derivative trades in February.

Mining giants Rio Tinto and Bhp Billiton were also on the downside, extending earlier losses as shares slumped 3.12% and 2.16%, while copper producers Xstrata and Kazakhmys retreated 2.25% and 2.94% respectively.

Elsewhere, shares in Hikma Pharmaceuticals plunged 2.05% after Glaxo and Pfizer sued the company for planning to sell an injectable blood-clot treatment, saying it infringes a patent licensed by Glaxo for argatroban.

In the U.S., equity markets pointed to a sharply lower open. The Dow Jones Industrial Average futures pointed to a fall of 0.75%, S&P 500 futures signaled a 0.83% decline, while the Nasdaq 100 futures indicated a 0.76% loss.

Also Wednesday, a report showed that euro zone retail sales fell by 0.1% in February, against expectations for a 0.1% increase and were 2.1% lower year-on-year.

Meanwhile, official data showed that German factory orders rose 0.3% in February, below expectations for a 1.2% increase, renewing concerns over the economic outlook for the bloc’s largest economy.

Later in the day, the ECB was to release its interest rate decision. In the U.S., a report on non-farm employment change was to be published, as well as data from the Institute of Supply Management on service sector activity.