Europe open: Shares slump on weak Asia, tapering fears

The pan-European Stoxx 600 index was down 1.57% with all major regional bourses lower. German shares slumped 1.9% after data showed a bigger-than-expected jump in producer prices last month. The benchmark DAX began trading on Monday with an increase in the number of constituents to 40 from 30.

Investors are eyeing the US Federal Reserve’s policy meeting on Tuesday and Wednesday, where the central bank is expected to lay the groundwork for a tapering of its stimulus programme. In the UK, the Bank of England holds its own policy meeting.

“Rattled investors are currently succumbing to risk aversion, as a series of concerns weighs on sentiment,” said interactive investor head of markets Richard Hunter.

“The persistence of the Delta variant, elevated inflation, supply chain blockages and raw material price increases are combing to form a toxic cocktail which is seeing optimism evaporate.”

In company news, Lufthansa rose 2.8% after saying it expects to raise €2.14bn to pay back part of a state bailout the airline received during the coronavirus crisis.

Shares in Aer Lingus and British Airways owner IAG rose 3.2% to top the Stoxx after chief executive Luis Gallego said the company is not planning to raise billions of euros from shareholders to get the company through the extended Covid-19 crisis.

"We do not see the necessity to do a rights issue and are not considering it," Gallego said, adding the company was talking through "different options" with banks.

Shares in life insurer Prudential fell to the bottom of the Stoxx, down 5.8%, after the company announced plans to raise £2bn via a share offering.

The stock was also hit by a sharp fall in Hong Kong shares, driven by a plunge in embattled Chinese property company Evergrande as investors weigh up whether the group’s massive debt problems could trigger a broader sell off across all financial markets.