European stocks posted their biggest weekly decline in seven months as emerging-market currencies suffered a selloff and a report showed China’s manufacturing industry unexpectedly contracted.
Banco Bilbao Vizcaya Argentaria SA slid 8.9 percent and Banco Santander SA dropped 5.6 percent as companies that generate earnings from emerging markets retreated. Royal DSM NV slumped 14 percent after the vitamin maker said that foreign-exchange rates would force it to take a prudent approach to its business this year. Celesio AG rallied 8.7 percent as McKesson Corp agreed to acquire the German drug wholesaler.
The STOXX Europe 600 Index fell 3.3 percent to 324.75 this week, its biggest decline since June. Stocks retreated around the world as evidence of weakness in China’s economy added to concern that smaller monthly asset purchases by the US Federal Reserve would destabilize emerging markets.
“The Chinese purchasing managers index was a bit weaker, Turkey and Argentina have had their domestic concerns, and people have taken the opportunity to take a bit of money,” said Steven Bell, a London-based fund manager at F&C Asset Management PLC.
“It has all become a bit messy. China has been going through some teenage growing pains in its economy. Adjusting to a lower pace of growth is something that is not easy to do,” Bell said.
A report on Thursday showed that manufacturing activity in the world’s second-biggest economy probably shrank for the first time in six months. The preliminary reading from HSBC Holdings PLC and Markit Economics dropped to 49.6, below the 50 level that separates expansion from contraction. The median economist estimate compiled by Bloomberg had called for a reading of 50.3.
The Fed announced last month that it would slow its US$85 billion a month bond-buying program by US$10 billion this month, potentially reducing capital flows into emerging economies.
The national benchmark indices in West European market, except Iceland, fell this week. The UK’s FTSE 100 lost 2.4 percent, its biggest drop in seven months. Germany’s DAX slid 3.6 percent, while France’s CAC 40 slipped 3.8 percent.