European stocks tumbled in volatile trading on Friday, capping their worst week since August 2011, as a decline in energy companies outweighed better-than-expected US jobs data.
The STOXX Europe 600 Index fell 1.5 percent to 341.35 at the close, after swinging between gains and losses for most of the day. The gauge rose in early trading after China’s introduction of measures to stabilize its markets boosted global equities, before sliding oil stocks dragged it lower. A rally of as much as 0.9 percent after the US report did not last long.
“Volatility will remain a permanent companion,” said Guillermo Hernandez Sampere, who helps manage about 250 million euros (US$272 million) as head of trading at MPPM EK in Eppstein, Germany. “We reacted to China earlier, but it faded. The big picture still remains cloudy, with the two main risk factors right now being commodity prices and whether the Chinese government has things under control.”
The STOXX 600 slipped 6.7 percent this week, its worst weekly decline since August 2011, as cuts to the yuan’s reference rate stoked concern that Chinese growth is slowing more than previously forecast. The VSTOXX Index measuring volatility expectations in eurozone shares posted its biggest weekly advance since April last year.
Germany’s DAX, which on Friday fell below 10,000 for the first time since October, reversed gains to slide 1.3 percent, extending its drop this week to 8.3 percent, the worst since August 2011. The equity benchmark, whose exporters have a significant exposure to China, also posted the worst weekly performance among western-European markets, including Greece.
In the US, the 292,000 gain in payrolls exceeded the highest forecast in a Bloomberg survey and followed a 252,000 increase in November that was stronger than previously estimated, a US Department of Labor report showed on Friday.
“The US jobs data confirms that the [US Federal Reserve] was not wrong in raising rates in December,” said John Plassard, senior equity-sales trader at Mirabaud Securities LLP in Geneva.
BP PLC, Total SA and Royal Dutch Shell PLC dragged a gauge of energy-related stocks to the worst performance of the 19 industry groups on the STOXX 600 and its lowest level since 2009. The measure also posted its worst weekly drop since 2011 as crude declined.
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