Resuming their fall, European stocks close lower

GMT 20:28 2015 Thursday ,24 September

Arab Today, arab today Resuming their fall, European stocks close lower

European stock markets
London - AFP

European stock markets closed lower Thursday following another volatile day of trading, as a spreading Volkswagen scandal offset positive German data.
Investors were also awaiting an update on the outlook for US interest rates, with the euro up against the dollar ahead of a speech later in the day from Federal Reserve chief Janet Yellen.

London's benchmark FTSE 100 index ended the session 1.17 percent down at 5,961.49 points compared to Wednesday's close.

In the eurozone, Paris' CAC 40 dropped 1.93 percent to 4,347.24 points.

Frankfurt's DAX 30, meantime, shed 1.92 percent to 9,427.64 points, with scandal-generated pressure that had socked Volkswagen's stock this week spreading to fellow German car maker BMW, which shed 5.15 percent on the day.

Europe's main stock markets had closed higher Wednesday, recovering some of the previous session's sharp losses.

"Unsurprisingly, and damningly, the day's focus remained on the sticky situation the auto-sector finds itself in," said Connor Campbell, analyst at Spreadex trading group, who said revelations of VW's global pollution cheating activities had caused suspicion to also shift to other car groups -- fuelling BMW's decline to 75.68 euros per share.

"That is only marginally above the 2015 intraday nadir the stock hit at the peak of August's China crisis, in a sign of just how disastrous this scandal could be for the German economy as a whole."

With rattled European markets closed, all eyes were expected to be on the speech from Yellen, during which investors hope she will provide more clarity on the bank's plans for an interest rate hike.

The Fed last week held fire on interest rates, citing concerns about how the slowdown in China would hit the US economy.

US stocks were trading lower ahead of Yellen's speech, with the Dow Jones Industrial Average down 1.20 percent at 16,084.24 points shortly after noon.The broad-based S&P 500, meanwhile, lost 0.20 percent to 1,938.76 points, while the tech-rich Nasdaq Composite Index shed 1.36 percent to 4,686.71.

In foreign exchange, the euro rose to $1.1242 from $1.1180 late on Wednesday in New York.

- VW shares recover -

Meanwhile auto giant Volkswagen searched Thursday for a new chief to steer it out of a global pollution cheating storm, with its shares closing 0.58 percent higher on news reports that Porsche chief Matthias Mueller had been picked to succeed Martin Winterkorn, who resigned as VW's CEO Wednesday.

But even as trading of Volkswagen stocks stabilised, suspicions over its cheating on its diesel car emissions spread for the first time to BMW -- and elsewhere across Europe.
Shares in top-of-the-range automaker skidded nearly 10 percent at one point after the weekly Auto Bild reported that emissions from one of its diesel models were 11 times higher than European Union norms.

There was no indication that BMW had engaged in deception similar to Volkswagen's by using software to fool official pollution tests -- suggestions it hotly denied -- but the report of high emissions from one of its diesel-engine cars nevertheless shook investors.

Late on Wednesday, the EU urged its 28 member states on Thursday to investigate whether vehicles comply with European pollution rules, and ensure that other car makers aren't cheating as VW has.

The spreading crisis offset news that German business confidence beat expectations by rising slightly in September, reflecting the continued robustness of Europe's biggest economy amid the current financial market turbulence.

The Ifo institute's closely-watched business climate index rose to 108.5 points this month from 108.4 points in August, beating analysts' expectations for a slight fall.

Asian markets mostly recovered Thursday from the previous day's sharp losses, but Tokyo tumbled as investors returned from a long weekend to play catch-up, with auto giants hit by the Volkswagen scandal.

Shanghai ended 0.86 percent higher, Sydney climbed 1.47 percent and Seoul added 0.13 percent.

But Hong Kong continued to drop, shedding 0.97 percent by the close. Tokyo finished 2.76 percent down, with carmakers among the biggest losers on Japan's Nikkei.

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