European stocks posted their biggest weekly drop since January amid speculation that the Crimean Peninsula’s poll today on leaving the Ukraine will exacerbate tension between Russia and the Western trio of the US, Germany and France.
The STOXX Europe 600 Index declined 3.3 percent to 322.23 this week as concern mounted that the US and the EU will react to the result of Crimea’s referendum with sanctions, triggering Russian reprisals and disrupting trade.
The benchmark has fallen 4.8 percent from its six-year high on Feb. 25.
“Tensions are rising,” Danske Bank A/S chief analyst in Copenhagen Allan von Mehren said. “We are increasingly concerned that we are in for more of the correction that started over the past week. It seems likely that the vote will be in favor of becoming part of Russia. This could escalate the situation significantly.”
The EU buys about half of Russia’s exports, according to the IMF.
Benchmark indices fell in all Western European markets this week, with Germany’s DAX losing 3.1 percent, the UK’s FTSE 100 shedding 2.8 percent and France’s CAC 40 sliding 3.4 percent.
Among the week’s biggest losers was Wm Morrison Supermarkets PLC, which plunged 12 percent after the UK grocer forecast that profit will decline for a third consecutive year.
The drop was Morrison’s biggest weekly plunge since 2008 and came after the smallest of the UK’s four main supermarket chains forecast that underlying profit will drop to as little as ￡325 million (US$541 million) in its current financial year, according to a statement on Thursday.
Morrison also said that its pretax profit shrank to ￡785 million in the 12 months through Feb. 2.
Rivals Tesco PLC — the UK’s biggest grocer — J Sainsbury PLC also fell this week, losing 5.9 percent and 7.5 percent respectively. Ocado Group PLC, which has a 25-year agreement to run Morrisons’ online shopping service, tumbled 14 percent.
A gauge of retail stocks slid 4.6 percent, the biggest decline among the STOXX 600’s 19 industry groups, while an index of mining companies fell 4.5 percent as China data added to evidence that growth in the world’s No. 2 economy has slowed.
A measure of industrial output in January and last month rose 8.6 percent, the weakest pace for the first two months of the year since 2009.
Performing well this week was Banca Monte dei Paschi di Siena SpA, which rallied 8.9 percent after a report said that JC Flowers & Co wants to buy a 20 percent stake in the Italian lender.