Tumbling oil prices and the worst rout in Greek equities since 1987 sent European shares to their biggest weekly slump in more than three years.
Friday’s 2.6 percent plunge in the STOXX Europe 600 Index was the largest in almost two months and extended the week’s losses to 5.8 percent. That was more than double the five-day drop in the MSCI Asia Pacific Index and Standard & Poor’s 500 Index.
With oil tumbling to a five-year low, European energy companies slumped to their lowest level since April 2009 and commodity producers had their worst week since May 2012.
GREEK COLLAPSE
In Greece, anxiety that voters will kick out leaders committed to the nation’s bailout sent the ASE Index down 20 percent, making it this year’s worst-performing equity market after Russia.
“Investors are taking profit on the eurozone, which has performed quite well since October,” Claudia Panseri, a global equity strategist at SG Private Banking in Paris, said by phone. “With oil furthering its decline, all commodities are under pressure, especially miners.”
After rallying 13 percent from this year’s low to an almost seven-year high on Dec. 5, the STOXX 600 retreated to its lowest level since Oct. 29. The gauge is now up only 0.7 percent for this year.
OPEC said it sees demand for crude next year at the weakest level in 12 years, and the International Energy Agency cut its global demand forecast for the fourth time in five months. That pushed oil down further and energy stocks in Europe sank 9.4 percent this week. Royal Dutch Shell PLC lost 7.7 percent and Total SA fell 9 percent.
MINING FALLS
A gauge of miners tumbled 8.5 percent, reaching its lowest level since July last year. BHP Billiton Ltd lost 10 percent and Rio Tinto Group declined 7.4 percent.
Friday’s drop in Greek shares sent the ASE to its lowest level since July last year. Piraeus Bank SA and National Bank of Greece SA slumped more than 27 percent this week for the biggest declines among STOXX 600 shares.
Greece’s government said it would start the process of electing a new president early. The risk is that Greek Prime Minister Antonis Samaras will have to call a parliamentary election that anti-bailout party Syriza might win, reintroducing the turmoil that threatened the European currency union two years ago. Syriza wants a writedown on Greek debt held by eurozone member states and the European Central Bank.
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