European stocks fail to find solid footing after meltdown

European shares resumed their downward slide Tuesday a day after a massive sell-off worldwide as investors failed to shake off dogged fears over economic weakness, banking woes and a gloomy oil price outlook.

European indices extended losses in afternoon trading, having failed at an early attempts to find some support in the wake of sharp losses on global exchanges on Monday.

Paris’ CAC, down 2.45 percent and below 4,000 for the first time in 14 months, led the pack lower, with the DAX and FTSE following, at 1.6 percent and 1.2 percent lower, respectively.

Shares in Madrid plummeted three percent to dip below the symbolic 8,000 point level, while Milan was also more than three percent lower weighed down by banking shares. Athens was nearly five percent lower.

Following heavy falls on Wall Street on Monday, Asia picked up the baton, resulting in Tokyo’s main index plunging more than 5.0 percent as investors sought the safety of the yen.

Gold, seen also as a haven in times of economic turmoil, hit a seven-month high above $1,200 an ounce on Monday. It slipped back slightly Tuesday to trade at just under $1,190.

“If yesterday was a bad day for Western indices, it certainly followed suit in Asia,” said Brenda Kelly, head analyst at trading firm London Capital Group.

“All this negativity in risk assets has helped to push gold towards the key $1,200 an ounce level as the fear of risk taking manifests itself in the rush to safe havens.”

Tokyo stocks led a rout across Asian markets Tuesday, while Japanese government bond yields turned negative and the dollar dived against the yen on fears over the global economy.

With most of the region closed for the Chinese New Year holiday, trading was thin, while the dealers stuck at their desks took the lead from New York and Europe where banking shares were battered on Monday.

The equities sell-off is the latest this year, which has seen trading screens from Asia to the Americas awash with red.

The latest round of blood-letting came on the back of worries about the financial sector as the global economy slows down, without the support of the Federal Reserve’s easy monetary policies.

Deutsche Bank, Germany’s biggest lender, has felt compelled to reassure investors that it has sufficient cash to pay its riskiest debts, as banking shares around the world take a hammering on slowdown fears.

In a short statement late Monday, the bank — whose shares have plummeted by nearly 40 percent since the beginning of the year — said that it has more-than-sufficient means to pay coupons on its riskiest debt both this year and next year.

In Tuesday trading, shares in the bank were down more than three percent.

An unexpected drop in German industrial production in December, as well as a decline in exports, has meanwhile cast a shadow over the outlook for Europe’s biggest economy, analysts said on Tuesday.

“Overall, the figures deal a further blow to expectations that growth in the German and eurozone economies will pick up in 2016,” said Jonathan Loynes of research group Capital Economics.

The European Central Bank would therefore need step up its stimulus, he argued.

The Paris and Frankfurt exchanges had lost more than 3.0 percent on Monday, with the German DAX ending below 9,000 for the first time since October 2014.

Wall Street’s three main indexes all lost more than one percent.

– Key figures around 1340 GMT –

London – FTSE 100: DOWN 1.21 percent at 5,620.34 points

Frankfurt – DAX 30: DOWN 1.61 percent at 8,834.40

Paris – CAC 40: DOWN 2.45 percent at 3,966.73

EURO STOXX 50: DOWN 2.05 percent at 2,728.09

Tokyo – Nikkei 225: DOWN 5.4 percent at 16,085.44 (close)

New York – Dow: DOWN 1.1 percent at 16,027.05 (close)

Euro/dollar: UP at $1.1280 from $1.1193 on Monday

Dollar/yen: DOWN at 114.54 yen from 115.84 yen

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