According to a report from the Wall Street Journal, "European stocks slumped Monday, despite broadly positive manufacturing data across the euro zone, after a spate of lackluster earnings.
The Stoxx Europe 600 was 1.34% lower, continuing January's slide. Last month, the index posted its worst monthly loss since June 2013".
Several major European companies gave disappointing earnings reports Monday.Lloyds Banking Group's shares fell sharply after it announced it will start to pay dividends later than analysts had expected, and set aside a £1.8 billion ($2.9 billion) provision to compensate clients for mis-sold products. Low-cost carrier Ryanair Holdings posted its first third-quarter loss in three years.
"The outbreak of nervousness in risk assets has been attributed mainly to a combination of [U.S. Federal Reserve] tapering, Chinese growth concerns and emerging market currency volatility; we suspect the lukewarm corporate earnings news is as big an issue for equity investors," said Ian Williams, economist and strategist at brokerage Peel Hunt.
A lower-than-expected January reading for U.S. manufacturing activity, attributed to adverse weather, was a further drag on European shares. The Dow Jones Industrial Average was down more than 1% in afternoon trading in New York, while Treasury bond prices rose.
Data showing a faster-than-expected expansion in euro-zone manufacturing in January did little to lighten the mood in stock markets, although it pushed the euro higher against the dollar. The euro continued to gain ground during the day. The disappointing U.S. manufacturing-activity report weighed on the dollar.
