European stocks fell the most in two weeks after the US Federal Reserve’s decision to keep rates unchanged stoked global-growth concerns and a stronger euro weighed on export-dependent companies.
Daimler AG, Volkswagen AG and BMW AG dragged automakers to a 3.3 percent drop, and Germany’s DAX Index led declines among western European markets with a 3.1 percent slide. The inverse correlation between the STOXX Europe 600 Index and the single currency reached levels not seen since 2003.
The STOXX 600 slid 1.8 percent to 354.77 at the close of trading, for a 0.3 percent weekly retreat.
The US central bank showed itself reluctant to call time on an era of record monetary stimulus amid market turmoil, rising international risks and slow inflation at home.
Faltering Chinese growth and last month’s devaluation of the yuan in particular have shaken investor confidence and roiled markets. Futures traders are now pricing in an 18 percent chance of a rate hike next month, a 46 percent possibility at the December meeting and about a 54 percent likelihood in January next year.
“Stocks are pricing in the cost of a higher euro today, with the Fed being a lot more dovish than expected,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “The stronger currency really adds to pressure on the ECB to deliver something — either an extension or an increase of the quantitative easing program, or both. That makes the Fed decision very supportive for bunds, but it will hurt European exporters in the short-term.”
German 10-year bund yields tumbled on speculation the eurozone central bank might boost stimulus. Emerging markets rallied on prospects for rates staying lower for longer, and the US dollar fell.
The volume of STOXX 600 shares changing hands was 62 percent higher than the 30-day average. A measure of European stock volatility rose 4.9 percent, after earlier jumping as much as 12 percent. The expiration of some futures and options on stocks and indexes, known as quadruple witching, added to market volatility today.
The UK’s FTSE 100 Index earlier extended losses to 2.2 percent, with Vodafone Group PLC and HSBC Holdings PLC among the stocks worst hit, before returning close to its previous level within minutes. The equity gauge ended the session 1.3 percent lower.
Among shares moving on corporate news, Deutsche Bank AG fell 4.4 percent, as the German lender plans to close its Russian corporate banking and securities business, a person with knowledge of the discussions said.
Abengoa SA slid 5.1 percent after two people familiar with the matter said banks are struggling to sell the Spanish renewable energy company’s loans.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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