European stock markets fell on Wednesday, extending a recent losing streak after US inflation data supported expectations of a rate rise, while brewer Carlsberg slumped after cutting its outlook. News that German lawmakers had voted to back a third bailout for Greece had little positive effect, with the focus firmly on fears of a fresh slowdown for the global economy as China battles with plunging exports and white-knuckle stock-market moves.
The pan-European FTSEurofirst 300 index, which has just suffered its worst week in more than a month, closed down 1.8 percent. The euro zone's bluechip Euro STOXX 50 index was also down 1.9 percent. Carlsberg was one of the worst performers on the FTSEurofirst, falling 9.2 percent after cutting its profit forecast. The stock marked its worst one-day fall in four years. Miner and commodities trader Glencore sank to an all-time low after profits fell on a slide in metal and oil prices. The company said capital spending next year was expected to be lower than this year.
Worries about China have come to eclipse those about Greece's debt problems in recent weeks, with China's devaluation of its yuan currency last week adding to investors' unease about the state of the Chinese economy. With price-to-earnings multiples for European equities well above their historical averages, growth fears are making a dent. "I would struggle to get enthused with the valuations one is being asked to pay in developed-market equity," said Nick Lawson, managing director at Deutsche Bank, in a note to clients. "There is nothing ... that attracts me to the equity market at present except equity (dividend) yield."
Chinese stocks reversed sharp declines and ended higher on Wednesday after the central bank injected more funds into the financial system for a second day in a bid to calm panicky markets. "While there is continuing concern that the current slowdown seen in Chinese economic growth might be spreading across the region, it also seems that a lack of confidence that the Chinese government and People's Bank of China will take sufficient measures to turn things around are hurting stocks," said Peregrine & Black senior sales trader Markus Huber.
US consumer prices rose only slightly in July but a solid increase in the cost of accommodation suggested inflation was probably stabilising enough to support an interest-rate increase from the Federal Reserve this year. The FTSEurofirst and Euro STOXX 50 both remain up by around 10 percent since the start of 2015, helped in part by economic stimulus measures from the European Central Bank. However, they also both remain nearly 10 percent below their peaks for 2015, reached in April, because of worries about the global economy.