Europe close: Stocks tumble as disappointing Chinese data fuels fear of slowdown

European equity markets began the week on a downbeat note, extending early falls as growth concerns resurfaced following disappointing Chinese data as auto stocks continued to slide.

The benchmark Stoxx Europe 600 index closed down 2.13%, while France’s CAC 40 fell 2.76% and Germany’s DAX lost 2.12%.

In the UK, a dismal performance by mining stocks led the FTSE down, as Glencore flirted with an all-time low throughout the session, closing 16.25% in the red.

"The DAX and huge losses go hand in hand at the moment,” said Spreadex’s financial analyst Connor Campbell.

“Akin to the FTSE’s commodity stocks, the European auto sector has been the biggest weight for the region’s indices, with a near 9% plunge by Volkswagen leading the downward charge.”

Elsewhere, the euro was broadly flat against the dollar but fell 0.38% against the yen and gained 0.19% against the pound, while Brent crude fell 2.27% to $47.52 a barrel.

Chinese data disappoints

Data released by the National Statistics Bureau showed Chinese industrial profits fell 8.8% on the year in August compared with a 2.9% drop in July and marking the biggest drop since records began in 2011.

On a quiet day data-wise in the Eurozone, investors across the Atlantic had plenty to analyse.

According to the Department of Commerce, US personal incomes grew 0.3% month-on-month in August, while personal spending climbed 0.4% against analysts’ expectations for a 0.4% and 0.3% increase, respectively.

Personal consumption expenditure remained flat on a month-on-month basis, while it edged up from 1.2% to 1.3% compared with the same period in 2014.

“As the deflationary pressure from the stronger dollar and lower commodity prices begins to fade next year, we expect core inflation to accelerate,” said Paul Ashworth, chief US economist at Capital Economics.

“The domestic economy is approaching full employment, which will put more upward pressure on both wages and prices.”

A report hinting the International Monetary Fund is likely to downgrade its global economic growth estimates due to slower expansion in emerging economies also weighed on sentiment.

“A forecast of 3.3% growth this year is no longer realistic,” said IMF head Christine Lagarde.

“A forecast of 3.8% for next year neither. We will however remain above the 3% threshold.”

In company news, Royal Dutch Shell dropped 2.60% after the company said it was stopping its offshore explorations in Alaska.

Banks were in focus after Swiss competition commission said it was probing UBS, HSBC, Deutsche Bank, Julius Baer, Barclays, Morgan Stanley and Mitsui over possible price fixing in the precious metals market.

Volkswagen slumped 7.49% after it emerged that 2.1m of Audi’s cars have been affected by the emissions scandal that has engulfed the German car manufacturer.