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European shares fall on Greek worries, Chinese growth concerns
February 9, 2015 / 11:52 AM / 3 years ago

European shares fall on Greek worries, Chinese growth concerns

* FTSEurofirst 300 down 0.9 pct, Athens’s ATG down 6 pct

* Escalating violence in Russia also hits sentiment

* JP Morgan downgrades DAX to ‘neutral’ from ‘overweight’

By Blaise Robinson

PARIS, Feb 9 (Reuters) - European stocks retreated on Monday, hurt by much softer-than-expected Chinese trade data and rising concerns about Greece’s relations with Europe after Prime Minister Alexis Tsipras said he would not extend the country’s bailout.

Escalating violence in Eastern Ukraine also rattled investors, with the DAX falling 1.4 percent. Germany is seen as one of Europe’s most exposed economies to Russia.

JP Morgan strategists downgraded their recommendation on the DAX to ‘neutral’ from ‘overweight’ on Monday, citing among other things the German benchmark’s recent strong outperformance.

Greek banking shares tumbled, with Bank of Piraeus falling 14 percent, Alpha Bank down 8.2 percent, Eurobank down 11.9 percent and National Bank of Greece down 8.9 percent. Athens’ benchmark index ATG fell 6 percent.

Around midday, the FTSEurofirst 300 index of top European shares was down 0.9 percent at 1,477.89 points.

Along with Germany and Greece, Southern European markets also featured among the biggest losers, with Spain’s IBEX down 1.5 percent and Italy’s MIB down 1.7 percent.

In his first major speech to parliament on Sunday, Tsipras laid out plans to dismantle Greece’s austerity programme, setting himself on a collision course with his European partners.

“This is brinkmanship. In the end, everybody will probably be sensible but there’s a risk of a policy mistake. Part of the problem is both sides feel emboldened,” said Ilan Solot, strategist at Brown Brothers Harriman.

“Greece is in a better economic situation than it was before ... and the government has a strong mandate from the people to change. But the EU is emboldened too because there are a lot more backstops than before, the ESM is in place, and you can see the contagion is so much smaller. Spanish and Italian yields hardly moved in this crisis.”

Worries over China’s economy also weighed on Monday. Data showed its exports fell 3.3 percent in January while imports tumbled 19.9 percent, far worse than analysts had expected.

“Markets are running the risk that the recent positive sentiment derived from the (ECB) QE announcement will fade more and more into the background,” said Markus Huber, senior analyst at Peregrine & Black.

Today’s European research round-up

additional reporting by Chris Vellacott and Atul Prakash in London; editing by John Stonestreet

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