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* STOXX Europe 600 falls 0.9 percent, off earlier lows
* U.S. rate hike in September seen possible
* Volatility touches after quiet summer
* E.ON drops after Uniper spin-off
By Danilo Masoni and Alistair Smout
MILAN/LONDON, Sept 12 European shares ended at
their lowest point in two weeks on Monday, adding to losses seen
last week as investors fretted over a possible near-term rate
hike in the United States.
The third day of losses came after bonds had sold off on the
back of expectations the Fed could lift rates already next week
and the European Central Bank may slow down stimulus measures.
Europe's STOXX 600 ended down 0.95 percent with
growth-sensitive sectoral indexes like basic resources
and banks leading the fallers.
The pan-European index, however, came off lows after
touching earlier in the session a one-month low, as some
investors said the sell-off could be short lived.
"Buying the lows in a rangebound market is usually a great
strategy, until the final dip which turns into a sell-off,"
Chris Beauchamp, market analyst at IG in London said. "This dip
could continue for a few more days, but as volume returns and
bargains emerge, I would not be surprised to see a fresh rally."
Earlier this month the STOXX 600 hit its highest level since
January, driven by a rally of more than 10 percent from lows hit
after Britain voted to leave the European Union.
Others including Stephane Ekolo, Chief European Strategist
at Market Securities, remained bearish on the market's
"Any Fed rate hike should be detrimental for the equity
market. I see more probable a more severe correction than what
we are currently facing," Ekolo said, mentioning a mix of no
earnings growth, bad economic data and global political risks.
Volatility, an indicator of investor nervousness,
touched its highest level since early August, having been low
for much of the summer. It later reduced its gains to end at a
three week high.
The rise of quantitative and algorithmic trading, aided by
persistently low volatility, has made market pullbacks swifter
than they used to be, said JCI portfolio manager Alessandro
"The problem is always forecasting the right timing and
this, instead, has become harder in the current financial
universe, more and more driven by the search of a yield that is
disconnected from fundamentals," he said.
German-listed E.ON was the top faller, down 14.8
percent after it spun off its Uniper division, while Linde
dropped 7 percent after its Praxair merger fell apart.
Associated British Food fell 10.8 percent after its
results, with traders citing weak trading for its flagship
Primark business, despite the company lifting its outlook for
the second time in two months.
Among the few gainers, German lighting group Osram
surged 10.1 percent following a report that Siemens
was weighing selling its 17 percent stake in its former unit.
(Reporting by Danilo Masoni; Editing by Toby Chopra)