(Bloomberg) -- European shares extended declines into a second day, after a rally that lifted them by the most since February, amid indications the region's economic growth lacks momentum.
Standard Life Plc fell 4.7 percent, leading insurers lower, after its investment unit suspended trading in the 2.9 billion pound ($3.9 billion) U.K. Real Estate Fund in a sign the turmoil from the Brexit vote may hurt the property market. Banca Monte dei Paschi di Siena SpA tumbled 9.6 percent after a person familiar with the matter said Italy is considering injecting fresh capital into the lender ahead of stress test results.
The Stoxx Europe 600 Index dropped 1.4 percent at 10:06 a.m. in London. All 19 industry groups retreated, with miners among the worst performers as commodities fell. Purchasing managers' indexes on manufacturing and services signaled lackluster growth in the euro area in June, with indicators pointing to France as the weakest performer.
“Part of the weaknesses or selloff today can be explained by some profit taking after a surprising week,” said Pierre Mouton, who helps manage about $9 billion at Notz, Stucki & Cie. in Geneva. “We have seen this morning that the PMI wasn't that good for the euro area, and markets can react to economic figures. It might be a good opportunity at the beginning of the third quarter to lighten the positions and wait.”
Europe's benchmark fell in light trading yesterday, after jumping 7.6 percent in the four days through Friday. Equities recovered more than half their losses from the aftermath of Britain's vote to leave the European Union, buoyed by central-bank reassurances about the availability of liquidity. Traders also pushed back bets for further Federal Reserve rate increases until at least 2018.
The Stoxx 600 is still down 11 percent this year, with Brexit adding to worries about global growth and the efficacy of central-bank stimulus.
The potential fallout from the U.K. vote is weighing on its asset management firms, with an analyst at Hargreaves Lansdown saying more funds may follow suit after the suspension by Standard Life Investments. Aberdeen Asset Management Plc slid 7.7 percent, while Legal & General Group Plc lost 6.8 percent after its shares were downgraded to hold from buy at Jefferies Group LLC.
Chr Hansen Holding A/S lost 4.2 percent after the Danish supplier of bacterial cultures used to make Gruyere cheese said lower prices for meat and milk weighed on quarterly sales of animal-health products.
To contact the reporters on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net, Camilla Naschert in London at cnaschert1@bloomberg.net. To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net, Namitha Jagadeesh
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
