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European shares fall on political, growth fears

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Reuters Delhi, India
Last Updated : Mar 04 2013 | 2:30 PM IST

By Richard Hubbard

LONDON (Reuters) - European shares, the euro and oil prices all fell on Monday as political stalemate in the U.S. and Italy and China's plans for tighter controls on its property sector hit sentiment.

Weak economic data from Europe and China last week was already weighing on major assets markets, which have gained sharply in the first two months of the year on hopes of a gradual global economic recovery this year.

"The worry is, given how much markets have rallied in January and February, we might now have an excuse to take money off the table," said Alpesh Patel, a founder of fund managers Praefinium Partners.

The market's fears have grown as broad U.S. spending cuts that automatically kicked in on Friday threaten to dampen growth in the world's largest economy, while China on Monday moved to slow activity in its property markets.

European shares opened around 0.3 percent lower with London FTSE 100 index, Paris's CAC-40 and Frankfurt's DAX around 0.5 percent lower.

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A 0.5 percent fall in U.S. stock futures pointed to a weak Wall Street start.

Uncertainty over the impact of the political stalemate in Italy, where an inconclusive election has cast doubt on the euro zone's austerity-led solution to its debt crisis, also sent safe-haven German government bonds higher.

Bund futures were around 21 ticks higher at 145.72, having risen almost two full points last week.

Earlier MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 1.7 percent to a nine-week low after China said it was tightening rules over lending for property purchases.

Data also showed growth in China's increasingly important services sector expanded at its slowest pace in five months in February, reinforcing the view that the recovery in the world's second-largest economy remains modest. China's factory growth also cooled to multi-month lows in February.

Meanwhile concerns about the negative economic impact from the U.S. spending cuts weighed on U.S. crude, which fell 0.5 percent to $90.176 a barrel. Brent was down 0.2 percent at $110.20.

(Editing by Philippa Fletcher)

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First Published: Mar 04 2013 | 2:17 PM IST

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