By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets dropped on Monday
as uncertainty about whether the U.S. will launch a military strike
against Syria weighed on sentiment.
The Stoxx Europe 600 index fell 0.1% to close at 305.84,
breaking a three-session winning streak.
"We saw a reasonable start today on the back of some decent
economic data from China and strong Japanese share prices after
Tokyo was named Olympic city, but unfortunately we've moved back on
the twin concerns of Syria and U.S. tapering of QE [quantitative
easing]," said Richard Hunter, head of equities at Hargreaves
Lansdown.
"The script hasn't particularly changed from last week and in
the absence of any concrete resolutions of those two concerns,
markets are likely to stay volatile," he added.
Among notable movers in the pan-European index, shares of BG
Group PLC slumped 5.1% after the energy firm warned production will
fall below previous expectations in 2014 due to unrest in Egypt, a
production delay in Norway and lower volumes from the U.S.
Other energy firms were also on the decline, tracking oil prices
lower. Shares of Total SA (TOT) fell 0.6% in Paris and Royal Dutch
Shell PLC (RDSB) dropped 0.8% in London.
Syria tensions
Investors tracked developments in the Syria conflict as U.S.
President Barack Obama tried to gain support for a retaliatory
strike against Syrian government targets. The calls for action come
after the U.S. said it has evidence Syria's government used
chemical weapons against civilians.
Obama has scheduled interviews with all major U.S. television
networks for broadcast later Monday, a day ahead of his scheduled
speech to the nation, in an attempt to build wider support for an
intervention.
Across the Atlantic, U.S. Secretary of State John Kerry
continued the White House's push to build European support,
stressing the moral case for a strike at a press conference with
U.K. foreign minister William Hague.
U.S. monetary policy also remained a concern for investors amid
continued uncertainty about when the Federal Reserve will start
tapering its $85-billion-a-month asset purchases.
After some upbeat data releases lately, investors started
speculating a reduction could come as soon as the September
meeting, but a lackluster jobs report last Friday raised doubts
about the tapering timetable.
"September still seems to be the favorite month for tapering at
the moment, but the nonfarm report did put a question mark over
that. It's an element of uncertainty and now we have conflicting
data from the U.S. along with the geopolitical uncertainty and
that's not something investors are happy about," Hunter from
Hargreaves Lansdown said.
U.S. stocks traded higher on Wall Street.
Europe movers
The U.K.'s FTSE 100 index slipped 0.3% to 6,530.74, while
France's CAC 40 index dropped 0.2% to 4,040.33.
Germany's DAX 30 index (DX) closed marginally higher at
8,276.32. Utility firms dropped in Frankfurt after analysts at HSBC
said the harsh environment for the industry in Germany is likely to
persist. The bank cut the price targets on both RWE AG and E.ON SE
and reiterated the underweight rating on the two firms.
Additionally, Bank of America Merrill Lynch downgraded E.ON to
underperform from neutral. Shares of RWE lost 1.6% and E.ON fell
1.7%.
Shares of Danone SA fell 1.6% in Paris after Exane BNP Paribas
downgraded the food-products firm to neutral from outperform.
On a more upbeat note, London's mining firms posted gains after
upbeat Chinese data. Trade figures over the weekend showed a pickup
in exports in August, providing further evidence that the world's
second-largest economy is recovering from a slowdown earlier in the
year. In addition, data on Monday showed inflation remained
subdued, with the consumer price index rising 2.6% year on year in
August.
Shares of Glencore Xstrata PLC (GLCNF) added 0.9% and Rio Tinto
PLC (RIO) picked up 1.1%.
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