By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stock markets took a hit on Monday as investors moved into the second week of the U.S. debt-negotiation stalemate and shutdown, with the weekend offering no hope for a near-term resolution. Risk-sensitive energy and bank stocks bore the brunt of losses, while drug stocks also fell.
Paring some of its earlier losses, the Stoxx Europe 600 index still fell 0.7% to 307.65, touching levels not seen since early September. The index closed out last week with an 0.7% loss.
There were few gainers and plenty of decliners, including LVMH Moet Hennessy Louis Vuitton SA , which fell more than 1.4%. In a report published Sunday, Reuters said analysts are growing increasingly concerned about the luxury group's brands and are worried these won't be able to provide alternative growth now that cash cow Louis Vuitton has fallen on tough times.
Staying on luxury goods, shares of Burberry Group PLC fell 1.5% after Chief Executive Angela Ahrendts warned in an interview with Les Echoes that the Chinese slowdown may be the new reality rather than a temporary lull.
Weekend interviews with top politicians and a warning from Treasury Secretary Jacob Lew that Congress is "playing with fire" if it doesn't increase the debt ceiling in time only increased investors' anxiety about the U.S. budget stalemate and looming deadline to raise the country's debt ceiling. Over the weekend, House Speaker John Boehner told ABC in his first interview since the shutdown began that he sees no end to the standoff without broader deficit negotiations. U.S. stock market futures were pointing to sharp opening losses for Wall Street.
"While Friday's modest gains in U.S. equities were driven by a glimmer of hope that leaders are getting closer, this seems to have waned over the weekend," said Stan Shamu, market strategist at IG. He said Boehner's comments are a direct cause of Monday's selloff. "This has really rattled markets and is likely to result in further near-term weakness for global equities."
Drug stocks were among Monday's big losers with French drugmaker Sanofi SA (SNY) down 1.4%. Sanofi Chief Executive Officer Chris Viehbacher told Bloomberg TV in an interview that he expects the company will return to growth in the fourth quarter. The French CAC 40 index fell 0.7% to 4,136.36.
Shares of European Aeronautic Defense & Space EADS NV was a stand-out gainer, up nearly 2% after its Airbus SAS unit won a $9.75 billion deal for its jetliners with Japan Airlines Co. in Tokyo.
Worries over the debt ceiling hit stocks linked to growth prospects, such as oil and bank stocks, amid fears a prolonged battle between U.S. politicians will have a detrimental effect on not only on the U.S., but potentially on the global economy.
Adding to the pain in Paris, shares of Total SA slid 1%, tracking a nearly $1 loss for crude-oil prices. In Oslo, shares of Statoil ASA fell 0.8%.
The German DAX 30 index fell 0.8% to 8,522.56, weighed by a 2% drop for Siemens AG (SI) and a nearly 2% drop for Bayer AG . Deutsche Bank AG fell 1%, and automakers were also under pressure, with BMW AG down 1.7%.
Shares of SAP AG (SAP) fell 1.6% after a Reuters article said the business software group was one of a number of companies talking to BlackBerry Ltd. (RIMM) (RIMM) about buying all or part of the struggling handset maker. SAP declined to comment to Reuters for the article.
London, the FTSE 100 index fell 0.8% to 6,404.01, driven by a 1% drop for HSBC Holdings PLC (HBC) and a 1.3% fall for Vodafone PLC (VOD) .
-Barbara Kollmeyer; 415-439-6400; AskNewswires@dowjones.com
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(END) Dow Jones Newswires
10-07-13 0927ETCopyright (c) 2013 Dow Jones & Company, Inc.
|EUROPE MARKETS: European Stocks Tumble As Debt Stalemate Deepens (2013/10/7)|
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