* FTSEurofirst 300 falls 1.3 percent
* Risk of pick-up in China defaults could slow growth
* Russia-exposed stocks hit again as sanctions talk builds
* Tod's weighs on luxury sector after earnings
By Alistair Smout
LONDON, March 12 European shares fell on
Wednesday, with cyclical stocks retreating on concerns over
Chinese growth, persistent tensions in Ukraine and
below-forecast earnings reports.
Miners, carmakers and luxury stocks, which are sensitive to
global growth trends, came under the most pressure as the
pan-European FTSEurofirst 300 fell 1.3 percent to
The basic resources sector dropped 1.8 percent after
Shanghai copper fell by its 5 percent daily limit on concerns
over credit markets in China, the world's biggest metals
London copper hit a 44-month low on growing concerns over
credit-linked defaults in China, where copper is often put up as
collateral for lending.
"There will be more corporate defaults in China, but
provided they can be ringfenced in the smaller banking and
finance area, then it won't have a lasting systemic impact on
global and financial markets," Jeremy Batstone-Carr, analyst at
Charles Stanley, said.
"Markets are on red-alert for the possibility that we'll see
more and bigger defaults as time passes. The bigger concern is
that wound up in these defaults is the threat of a Chinese
slowdown over and above that which is pencilled in," he said.
The FTSEurofirst 300 has now lost 3.3 percent over the last
Stock markets have been under pressure since a further
deterioration in the situation in Ukraine at the beginning of
last week, when Crimea effectively fell under Russian control,
prompting the worst East-West crisis since the Cold War.
Companies exposed to Russia such as car manufacturer Renault
and Austria's Raiffeisen Bank came under
pressure again on Wednesday. Traders said moves by the EU and
the United States to prepare sanctions against Russia risked
retaliation that could hurt European economies.
"The Russians are going to take it to the wire ... I don't
think investors believe conflict will come to pass, and we'll
have to see how deep any potential sanctions are. But it's a
flight to safety for the moment," Mike McCudden, head of
derivatives at Interactive Investor, said.
The STOXX Europe 600 personal and household goods sector
fell 1.9 percent, led by Tod's, which plunged
4.8 percent after the Italian luxury shoemaker posted a fall in
2013 profit and said it was cautious about prospects for 2014.
In the same sector, tobacco firm British American Tobacco
was one of several UK-listed stocks to trade without
entitlement to its latest dividend payout, sending its shares
down 3.2 percent.
Europe bourses in 2014:
Asset performance in 2014:
Today's European research round-up