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European Markets Fall On Worries About Fed, China

6/24/2013 7:51 AM ET

The European markets are trading lower on Monday, as investor sentiment was impacted by concerns about the Federal Reserve tapering the stimulus program. The credit crunch in China added to the woes.

The People's Bank of China said it would fine-tune its policies as needed, suggesting slightly easier monetary conditions ahead as an acute cash crunch exacerbated challenges faced by an already slowing economy.

The bank will continue to implement prudent monetary policy, the central bank said in a statement after a quarterly meeting of the Monetary Policy Committee chaired by Governor Zhou Xiaochuan in Beijing.

Germany's business confidence improved slightly to 105.9 in June from 105.7 in May, reports said citing a survey from the Ifo institute. The reading came in line with economists' expectations.

Debt problems in member states of Eurozone should not stop the European Central Bank from lifting interest rates, Governing Council member Jens Weidmann said in an interview published on Sunday. Neither states nor the private sector should assume that the current low interest rate environment would continue permanently, he told Germany's Sueddeutsche Zeitung.

The Euro Stoxx 50 index of eurozone bluechip stocks is declining 1.84 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 1.51 percent.

The German DAX is dropping 1.4 percent and the UK's FTSE 100 is falling 1.3 percent. The French CAC 40 and Switzerland's SMI are declining 2 percent each.

In Frankfurt, Lanxess is declining 2.9 percent and Infineon Technologies is falling 2.7 percent. Drugmaker Merck is losing 2.4 percent.

Metro is losing over 6 percent after Citigroup cut the department stores operator to ''Sell'' from ''Neutral.''

Wind turbines maker Nordex is dropping 3.6 percent. HSBC raised the stock to ''Neutral'' from ''Underweight.''

Bucking the trend, Kabel Deutschland is gaining 1.8 percent. British telecom giant Vodafone intends to launch a voluntary public tender offer for the cable operator which has an enterprise value of 10.7 billion euros. Vodafone is marginally higher in London.

In Paris, Carrefour is losing over 4 percent. STMicroelectronics and Saint-Gobain are dropping around 2.6 percent each.

Lender BNP Paribas, metal fabrication firm Vallourec, dairy giant Danone and carmaker Renault are dropping between 2.2 percent and 1.9 percent.

In London, Vedanta Resources is declining 4.8 percent. Travis Perkins, Croda and Resolution are losing between 3.4 percent and 3.2 percent.

Eurasian Resources Group B.V. offered to acquire the remaining share capital of Eurasian Natural Resources for $2.65 per share in cash and 0.230 shares of Kazakhmys for each ENRC share. Eurasian Natural Resources shares are up 0.9 percent. Kazakhmys is declining 7.8 percent.

Despite the overall negativity, Severn Trent is adding 1.9 percent and United Utilities is gaining 1.5 percent. Temporary power provider Aggreko is adding 1.3 percent.

Essar Energy is gaining 3.7 percent after reporting annual results.

Spanish telecommunication group Telefónica S.A. has agreed to sell its 100 percent share in Telefónica Ireland, Ltd., to Hutchison Whampoa Group for 850 million euros. Telefónica is falling 1.6 percent in Madrid.

Across Asia/Pacific, markets closed firmly in negative territory. Australia's All Ordinaries fell 1.5 percent and Japan's Nikkei 225 dropped 1.3 percent. China's Shanghai Composite Index retreated 5.3 percent while Hong Kong's Hang Seng declined 2.2 percent.

In the U.S., futures point to a lower open on Wall Street. In the previous session, stocks ended mixed as investors continued to react negatively to the prospects of Fed scaling back stimulus. The Dow and S&P 500 rose around 0.3 percent each, while a sharp drop in Oracle shares dragged the tech-heavy Nasdaq down 0.2 percent.

In the commodity space, crude for August delivery is falling $0.28 to $93.41 per barrel and August gold is losing $11.4 to $1280.6 a troy ounce.

by RTT Staff Writer

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