(Bloomberg) — European stocks snapped a two-day gaining streak as investors weighed the sustainability of China’s rally on its stimulus package. The Stoxx Europe 600 Index fell 0.3% as of 8:17 a.
m. in London. Most sectors were in the red.
Banks, energy and utility stocks led losses while miners were supported by another strong day for iron ore, thanks to speculation that China’s mammoth stimulus package would help to bolster demand. Luxury and healthcare also gained. Still, worries remain.
“China has a lot more work to do to revive economic demand, so we are not looking to add exposure to the sector,” said Patrick Armstrong, chief investment officer at Plurimi Wealth LLP. He added he doesn’t expect a broad sustained rally in exposed sectors on this, and thinks the market will reward well managed brands. Among single stocks, Rightmove’s board concluded that REA Group’s increased proposal continues to be unattractive and “materially” undervalues the company.
Meanwhile Commerzbank tapped Bettina Orlopp as the next CEO. As evidence of a weakening economy mounts with US data that showed consumer confidence unexpectedly falling in September as well as worrying PMIs in Europe, traders are growing increasingly confident the European Central Bank will reduce rates again next month. Money markets imply a roughly 60% chance of a quarter-point reduction in October, up from around 20% last week.
Over at the ECB, Governing Council member Klaas Knot said he expects gradu.