European shares slump on China, stimulus concerns
LONDON, June 24
LONDON, June 24 (Reuters) - European shares fell on Monday and pushed a leading regional index firmly into negative territory for the year as worries over a possible Chinese credit crunch and a scaling back in U.S economic stimulus hit markets.
The pan-European FTSEurofirst 300 index provisionally closed down 1.5 percent at 1,115.39 points, its worst finish since ending at 1,108.59 points on Nov. 29 last year. It is now down 1.6 percent year to date.
The euro zone's blue-chip Euro STOXX 50 index also fell, down 1.4 percent to 2,513.48 points, and it is now down nearly 5 percent since the start of 2013.
World stock markets hit record highs in late May but then fell back after U.S. Federal Reserve head Ben Bernanke confirmed the Fed would soon scale back a stimulus programme known as "quantitative easing" that had driven the equity rally.
Signs of a cash crunch in China's banks over the last week have also added to the rout, with some 860 billion euros ($1.1 trillion) wiped off the pan-European STOXX Europe 600 index since markets hit a peak in late May.
"There are concerns about China and there's little for people to be positive about at the moment. Things have been dropping like a stone. It seems a little bit too brutal for it to be just a healthy pullback," said MB Capital trading director Marcus Bullus.
In the past, such declines have seen investors move in to buy stocks on the cheap, but Bullus said he would not want to buy equities at current levels.
"We are coming down to oversold levels, but I wouldn't want to be catching a falling knife," he said, referring to the trouble with timing the bottom in such a market.
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