* European benchmark indexes fall 0.7 pct
* Companies with big exposure to EM hammered again
* Europe more exposed to EM than U.S., Japan -MSCI
* Volatility index jumps 53 pct in two weeks
* EPFR data shows more inflows into Europe stocks
By Blaise Robinson
PARIS, Feb 3 European stocks sagged on Monday,
resuming their sell-off of the past 10 days after data showed
China's economy losing momentum and also on worries that
emerging market turmoil could erode European corporate results.
Investors overlooked an upbeat German manufacturing survey -
showing the sector's fastest growth in more than two years in
January - and fretted instead about figures showing a slowdown
in Chinese manufacturing.
Banking stocks were among the biggest losers, with Julius
Baer sinking 5.1 percent after posting
lower-than-expected annual results and saying clients
transferring from recently-acquired Merrill funds were set to
reach only the low end of its target range.
At 1130 GMT, the FTSEurofirst 300 index of top
European shares was down 0.7 percent at 1,282.91 points. The
benchmark index has lost 5.3 percent since peaking on Jan. 21,
its steepest pull-back in seven months.
The euro zone's blue-chip Euro STOXX 50 index
was down 0.7 percent at 2,992.64 points.
"The market hasn't been this difficult in 18 months. It's
tough to find good buys, and we definitely avoid all the
exporters with a significant exposure to emerging markets," said
Arnaud Scarpaci, fund manager at Montaigne Capital.
"The Euro STOXX 50 could easily fall back to 2,700-2,730
points, the low point hit last September. Meanwhile, volatility
products are back in vogue."
The Euro STOXX 50 Volatility index, Europe's widely
used gauge of investor sentiment based on put and call options
on Euro STOXX 50 stocks, has jumped 53 percent since Jan. 21,
signalling a surge in demand for portfolio protection.
INFLOWS INTO EUROPEAN STOCKS
Shares in companies with big exposure to emerging markets
were hammered again, with cement maker Lafarge down
2.1 percent and lender Banco Santander down 1 percent.
Retailer Casino - which derives 56 percent of its
revenues from emerging countries - tumbled 4.3 percent, hurt by
a downgrade from Morgan Stanley analysts, who said in a note
that the market value of Casino's emerging market assets has
dropped by 2.6 billion euros in the past year.
Overall, European companies have a much bigger exposure to
emerging markets than U.S. or Japanese companies, according to
data from MSCI. Emerging markets represent about 24 percent of
revenues overall for firms listed on the MSCI Europe index
, versus 15 percent for the MSCI United States
index and 14 percent for the MSCI Japan index
Emerging market assets have recently been rocked by the
prospect of reduced stimulus from the U.S. Federal Reserve.
The Fed announced last Wednesday a second cut in its
quantitative easing programme, which had fuelled a sharp rally
in global equities in 2013. Reduced U.S. stimulus has prompted
investors to repatriate investments, triggering massive outflows
and sending a number of local currencies plunging.
"It's not yet time to buy this dip," said David Thebault,
head of quantitative sales trading at Global Equities.
"The crisis in emerging markets has taken most people by
surprise and Western investors are repatriating funds. This move
could take a while and bring even more volatility."
But despite the market's recent pull-back, data shows
European stocks continue to see brisk investment inflows, in
contrast with massive outflows rocking emerging market funds.
The latest data from fund-tracking EPFR Global showed that,
while emerging markets equity funds posted their biggest outflow
since the third quarter of 2011 in the week ended Jan. 29,
investors continued to pour money into Europe equity funds.
Interactive map of emerging markets currency performance:
Europe bourses in 2014:
Asset performance in 2014:
Today's European research round-up