LONDON: European stock markets dropped on Wednesday after recent rallies, while the aviation sector took a knock as Emirates airline cancelled a major order of Airbus planes.
Analysts said markets turned sour after the World Bank cut its outlook for global growth, ending a winning streak on global equities markets fuelled by upbeat US, Japanese and Chinese data.
London's FTSE 100 index of top companies dropped 0.50 percent to 6,838.87 points, with losses limited by official data that revealed a further drop in British unemployment to a fresh five-year low point.
Frankfurt's DAX 30 shed 0.79 percent to 9,949.81 points. On Tuesday, the index touched a fresh record high, one day after it closed above 10,000 points for the first time.
The CAC 40 in Paris slumped 0.87 percent to 4,555.11 points, after ending at its highest point since June 2008 a day earlier.
"Markets in Europe didn't take too well the World Bank's latest growth forecasts, trading in the red for most of the day," said analyst Jasper Lawler at CMC Markets UK.
The World Bank late Tuesday lowered its 2014 global growth forecast to 2.8 percent, down from its 3.2 percent January estimate, citing bad weather in the United States that depressed economic activity, a slower growth outlook in China, and the Ukraine crisis.
Aviation shares dive:
Meanwhile shares in the aviation sector dived on Wednesday. "News of a sudden order cancellation knocked back Airbus and Rolls Royce," said Brenda Kelly, chief market strategist at IG traders.
"A second bolt from the blue came from Lufthansa, which issued a surprise downgrade to forecasts, knocking back UK-listed airlines too."
Emirates on Wednesday announced that it had cancelled an order for 70 long-haul A350 planes from European manufacturer Airbus.
Airbus added that it was still very confident of the A350 programme and said there were almost 750 planes on its order book ready to enter service.
In London, engine maker Rolls-Royce said the cancellation would slash the value of its order book by 2.6 billion pounds (3.2 billion euros, $4.3 billion).
In reaction, shares in Airbus dropped five percent at one point. They closed down 3.1 percent to 52.21 euros, while Rolls-Royce lost 5.5 percent to 1,017 pence.
Airlines also slumped heavily, with Lufthansa diving 14.2 percent to 17.08 euros and Air France-KLM falling 7 percent to 11.05 euros.
In London, British Airways and Iberia parent group IAG shed 3.1 percent to 400 pence and Easyjet slid 4 percent to 1,530 pence.
Lufthansa cut its earnings targets for this year and next in the face of disappointing developments in passenger and freight business, in addition to financial fallout from strikes.
"The executive board is reducing its operating profit forecast for 2014. It now expects an operating result of approximately 1.0 billion euros," from its previous forecast of 1.3-1.5 billion euros, it said in a statement.
Meanwhile shares in French steel pipes maker Vallourec slumped 11.3 percent to 35 euros, after it slashed its targets over falling demand in Brazil.
Euro slips:
Asian stock markets ended mixed on Wednesday, with Tokyo's Nikkei index bouncing back from the previous day's losses and the bourses in Hong Kong and Sydney both falling.
US stocks moved lower Wednesday. In midday trading, the Dow Jones Industrial Average fell 0.55 percent to 16,852.13 points, while the broad-based S&P 500 shed 0.34 percent to 1,944.21, and the tech-rich Nasdaq Composite Index slipped 0.13 percent to 4,332.49.
In foreign exchange trading, the European single currency drifted down to $1.3533 from $1.3545 late in New York on Tuesday.
The euro slid to 80.58 British pence from 80.82 pence. The British pound grew to $1.6793 from $1.6756 on Tuesday.
On the London Bullion Market, gold prices rose to $1,262.00 an ounce from $1,259.50 late on Tuesday.
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