European stocks declined for a fourth week, led by banks and carmakers, as concern escalated that the global economy is slowing and as the leaders of the eurozone failed to restore investor confidence.
The benchmark STOXX Europe 600 Index dropped 6.1 percent to 223.13 this past week to its lowest level since July 2009. The gauge has declined 23 percent from its peak in February as concern mounted that Europe’s sovereign-debt crisis will spread to the larger economies of Italy and Spain.
The slump has pushed down the STOXX 600’s price-to-earnings ratio to 9.2 times the estimated earnings of its constituent companies, below the average multiple of 12.2 over the last five years, according to data compiled by Bloomberg.
GDP in the 17-nation eurozone rose 0.2 percent from the first quarter. Economists had predicted that the economy would expand 0.3 percent, according to the median of 34 estimates in a Bloomberg News survey.
“Despite attractive valuations at current earnings levels, stocks saw a very large selloff this week,” said Emmanuel Hauptmann, senior equity fund manager and partner at Reyl Asset Management SA in Geneva. “The GDP numbers in Europe show the core of the eurozone stagnating in the second quarter.”
National benchmark indexes fell in every western European market except Iceland this week. Germany’s DAX Index declined 8.6 percent, while the UK’s FTSE 100 index dropped 5.2 percent. France’s CAC 40 index slid 6.1 percent.
A gauge of European banks was the biggest drag on the STOXX 600 this week.
RBS led losses, dropping 22 percent and Barclays PLC fell 20 percent. Lloyds Banking declined 16 percent, while Danske Bank A/S slid 15 percent.