Europe close: Stocks decline amid fresh concerns over global economic growth

The benchmark Stoxx Europe 600 index fell 1.22%, while France’s CAC 40 slid 1.46% and Germany’s DAX closed down 0.90%.

The euro gained 0.49% and 0.76% against the dollar and the yen respectively but fell 0.26% against the pound, while Brent crude rose 0.96% to $48.04 a barrel.

Volatility spreads across Asia

Stocks in Asia ended lower following disappointing data releases. Figures showed core machinery orders in Japan – a key indicator of capital expenditure – fell 3.6% in July, compared with expectations for an increase.

In China, the producer price index dropped 5.9% in August, its biggest fall since 2009 and suggestive that deflation remains a risk.

The consumer price index rose to 2% in August from a year ago.

“Just when investors though it was safe to get back in to the market, weak Chinese data has sapped confidence once again,” said Mike McCudden, head of derivatives at Interactive Investor.

Mixed data in the Eurozone

On the economic data front, Spanish industrial production grew by 0.6% month-on-month in July, boosted by a jump in energy output, according to the country’s statistics office, INE.

Meanwhile, French industrial production fell unexpectedly in July, dropping by 0.8% over the month against consensus for a 0.2% increase, as factory output decreased by 1%.

There was further bad news from Greece, where the unemployment rate rose to 25.2% in June from 25% in May, remaining at record highs but down from 26.6% in the same month last year.

In the UK, the Bank of England voted 8 to 1 to keep the interest rates unchanged, though policymakers added that economic risk had increased due to the China-driven volatility that has plagued the markets over the last month.

Even though the reasons for this decision are fairly obvious, investors still appeared to be sobered by the confirmation from the central bank that ‘risks to the growth outlook were skewed moderately to the downside’ across August due to the price-eroding pressure of China,” said Spreadex’s financial analyst Connor Campbell.

Across the Atlantic, US import prices in August slumped to their lowest level since the 2009 crisis, while weekly unemployment benefits pulled back from the two-month high they had registered in the previous week.

In company news, German utility E.ON tumbled 7.61% after it issued a profit warning and said it has abandoned plans to spin off its nuclear power plants.

Banco Santander, which generated approximately 28% of its revenue in Brazil last year, declined 3.31% after Standard & Poor’s cut the country’s credit rating to junk.