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European shares fall after slump in China

Published 08/19/2009, 03:17 AM
Updated 08/19/2009, 03:21 AM
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LONDON, Aug 19 (Reuters) - European shares fell in early trade on Wednesday, after a sharp fall on China's stock market, and as doubts on global economic recovery persisted. At 0710 GMT, The FTSEurofirst 300 index of top European shares was down 1 percent at 925.60 points.

The benchmark index rose 1.4 percent on Tuesday and is up more than 43 percent from its lifetime low of March 9, on hopes of a strong, fast economic recovery.

Banks took most points off the index. BNP Paribas, Banco Santander, Barclays and Societe Generale fell between 1.1 and 1.5 percent.

HSBC fell 2.6 percent, on going ex-dividend.

China's stock market tumbled more than 4 percent on Wednesday, led by recently listed shares, as investors were disappointed that authorities did not take steps to support the market after the key index had fallen as much as 19 percent over the past two weeks.

"The decline is linked to the fall on the Chinese stock exchange," said Heino Ruland, strategist at Ruland Research, in Frankfurt.

"It goes back to disappointing consumer sentiment figures in the U.S. last week. There is no sign that we can expect a V-shaped global recovery and the realisation of this will take the heat out of the market. Earnings forecasts are still too high."

Eurasian Natural Resources rose 3.1 percent after the miner's results beat expectations. (Reporting by Brian Gorman)

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