* European stocks hit session lows after poor U.S. PMI
* German flash manufacturing PMI shows lowest reading in 6-1/5 yrs
* Banks, auto stocks post steep falls (Updates to include U.S. PMI data, closing prices)
By Susan Mathew and Medha Singh
March 22 (Reuters) - European stock markets deepened losses on Friday, closing near session lows, as fears of a slowdown in global growth after weak manufacturing data from across Europe were exacerbated by dismal data from the United States.
After downbeat manufacturing activity from Germany reignited fears of a recession in the region's biggest economy, the inversion of the U.S. yield curve after similar U.S. data stoked fears that the world's largest economy may also be slipping into recession. MKTS/GLOB pan-European STOXX 600 index .STOXX , which had opened higher on relief at the extension of Britain's Brexit deadline, slipped for a third day to close down 1.2 percent to take weekly losses to 1.3 percent - its steepest this year.
The euro zone-wide flash PMI also showed businesses performed much worse than expected this month, while French business activity slowed unexpectedly. classic gauge of fear .V2TX – known as implied volatility, which tracks demand for options in European stocks – hit more than 9-week highs and posted its biggest weekly rise in a year, the first concrete sign of activity in a while. all sectors within the STOXX 600 were in the red with banks .SX7P , auto .SXAP and chemicals sectors .SX4P down more than two percent each, along with industrial goods and services stocks .SXNP . The bank sector posted its biggest daily drop sine early February.
Italian lenders Unicredit CRDI.MI , Banco BPM BAMI.MI , and UBI UBI.MI led losses among banks after Credit Suisse (SIX: CSGN ) said the market is underestimating Italian banks' net interest income challenges. NESN.S , the world biggest food group, was the biggest drag on the benchmark, down 1.7 percent, followed by more than 2 percent dips in HSBC Holdings .HSBA.L and oil and gas majors Total TOTF.PA BP PLC BP.L .
"With numerous headwinds facing the manufacturing sector in Germany – including a slowdown in the automotive sector, Brexit, U.S.-China trade and a global economic slowdown – there's little to be optimistic about," said Craig Erlam, senior market analyst at Oanda in London.
Most European bourses had opened on a stronger footing, relieved at the European Union's agreement to at least a two-week reprieve that precludes Britain crashing out of the bloc without a deal next week. the relief from the summit overnight, there were more signs of firms making preparations for a no-deal Brexit, as British Prime Minister Theresa May now faces task of persuading a deeply divided parliament to back her Brexit deal. A no-deal exit could well have a depressive effect on Europe's major economies.
Goldman Sachs (NYSE: GS ) analysts reduced the likelihood of May's deal passing to just 50 percent, while raising the chances of "no-deal" to 15 percent. The bank continues to put the chances of no Brexit at all at 35 percent. odds of a no-deal exit had fallen to just 5 percent on online betting market Betfair.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.