By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks fell Monday, with shares
of natural-resource producers struggling after soft economic data
from China and a fresh selloff in oil prices.
Investors also weighed a fresh round of economic data from
throughout Europe, highlighted by further slowing in manufacturing
activity in the eurozone. Data firm Markit said its monthly survey
of purchasing managers fell to 50.1 in November, down from a
preliminary estimate of 50.4. The data arrive as European Central
Bank officials have indicated it may set up stimulus efforts to
battle low inflation and stagnating economic growth.
Markets: Mining stocks slumped, with two measures of
manufacturing activity in China -- a key buyer of commodities --
indicating further weakness in the world's second-largest economy.
HSBC early Monday said its China purchasing managers index fell to
a six-month low of 50.0, from 50.4 in October. Meanwhile, China's
official PMI fell to 50.3 from 50.8 in October, the lowest level
since March.
In the space, iron-ore heavyweight BHP Billiton PLC (BHP) shares
fell 2.8%, Antofagasta PLC lost 2.7%, Anglo American PLC dropped
2.6% and Rio Tinto PLC gave up 1.7%.
Oil prices, meanwhile, extended losses from Thursday's session
when the Organization of the Petroleum Exporting Countries failed
to agree to an output cut. U.S. crude-oil futures (CLF5) were down
1.5% though they recaptured the $65-a-barrel level.
The European oil exploration and production space has fallen
roughly 35% this year, tracking the recent sharp slide in the oil
price, and "while this has been an uncomfortable ride, downside
risks remain, in our view," said analysts at J.P. Cazenove, in an
note Monday.
The sector is likely to face oil prices sitting below $90 a
barrel for at least the next six to 12 months, or longer, and the
weaker prices come at a time that "balance sheets are more
stretched than at any point in recent memory given investments in
projects sanctioned with $100 a barrel in mind", the analysts
added.
J.P. Morgan Cazenove said oil and gas producer Afren PLC is
among the companies whose shares are most heavily exposed to the
decline in oil prices. It cut Afren to an underweight rating from
overweight, prompting Afren shares to drop 6.2%, leading decliners
on the Stoxx Europe 600. Tullow Oil PLC fell 5.8% as its rating was
cut to neutral from overweight.
Overall, the Europe 600 index fell 0.4% at 345.87, off session
lows as the consumer-services group and utilities moved higher.
Shares of E. ON SE climbed 4.1% as the German utility plans to
split into two companies.
Germany's DAX 30 fell 0.4% to 9,945.03 and France's CAC 40 index
lost 0.4% at 4,370.77. The U.K.'s FTSE 100 index declined 0.8% to
6,669.89. Italy's FTSE MIB moved down 1.6% following confirmation
that Italy's gross domestic product slipped back into recession in
the third quarter.
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