(Bloomberg) -- The downward spiral for European stocks extended into a third day, the longest run of losses in three weeks.
A sea of red engulfed all western-European markets and industries, with Spanish, Italian, German and French national gauges falling the most -- down more than 2 percent. The Stoxx Europe 600 Index lost 1.6 percent at 11:49 a.m. in London, with its valuation of about 14 times estimated earnings near the lowest since 2012 relative to the MSCI All-Country World Index.
Renewed concerns about Italian banks and economic growth are adding to worries about the fallout of Britain's vote to leave the European Union, with the Stoxx 600 resume losses after its biggest weekly rally in more than a month. BlackRock Inc. cut the region's shares to underweight, with a negative view on the euro area's banking sector, while Societe Generale SA's chairman said Italy's banking crisis could spread to the rest of Europe.
“In the next three to six months, we'll see a deterioration in the fundamental data, so last week's rebound was just a rebound off technical and sentiment-driven levels,” said Stewart Richardson, chief investment officer at RMG Wealth Management in London. “Now people are beginning to think about the real issues in the medium term and may be thinking there's something not right in the system.”
Deutsche Bank AG, down 6.2 percent, led losses in the DAX Index, which had all of its companies down on Wednesday. A report showed German factory orders unexpectedly failed to rise in May as uncertainty over the global outlook deterred demand for goods. The U.K.'s FTSE 100 Index dropped 1 percent, erasing a gain of as much as 0.5 percent, for one of the smallest retreats in western-European markets as the pound traded at its lowest level since 1985.
More than 540 companies in the Stoxx 600 declined, with automakers, insurers and banks all slumping more than 2 percent as industry groups. Banco Popular Espanol SA, Royal Bank of Scotland Group Plc lost more than 4.4 percent. U.K. homebuilders Barratt Developments Plc and Taylor Wimpey Plc continued their descent, down more than 4 percent.
Telecom Italia SpA sank 10 percent after Iliad SA's majority shareholder Xavier Niel said he planned to sell its investment. Tullow Oil Plc tumbled 15 percent after announcing a $300 million sale of convertible bonds. Tesco Plc lost 7.2 percent after HSBC Holdings Plc removed the U.K. grocer from a list of top European stocks, cutting its rating on concerns over a price war. Peer Wm Morrison Supermarkets Plc, also downgraded by the broker, fell 6 percent.
Miners of precious metals Randgold Resources Ltd. and Fresnillo Plc climbed more than 5 percent as gold and silver gained. Telenor ASA added 2.3 percent after ET reported that Vodafone Group Plc is a frontrunner to buy its Indian operations. Banca Monte dei Paschi di Siena SpA rallied 9.8 percent after slumping 31 percent in the past two days. The Italian market regulator banned short selling on the stock for Wednesday's session.
To contact the reporter on this story: Roxana Zega in Zurich at rzega@bloomberg.net. To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net.
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