European stocks drop at open

Reported by AAP
Thursday, August 20, 2015
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European stock markets have fallen at the open as traders reacted to sliding oil prices, China's economic problems, the outlook for US interest rates and Greek action over its bailout.

London's benchmark FTSE 100 index dropped 0.55 per cent to 6,368.40 points compared with Wednesday's close.

Frankfurt's DAX 30 shed 0.83 per cent to 10,593.28 points and the CAC 40 in Paris lost 0.34 per cent to open at 4,867.45.

"With Greece receiving the first 26 billion euros - slice of its 86 billion-euros bailout this morning, just in time to pay the ECB, there should be a sense of euphoria on the markets," said Connor Campbell, analyst at Spreadex trading group, of a 3.4 billion euros ($A5.14 billion) loan payment made Athens to the European Central Bank on Thursday.

"Instead continued concerns over China have sent the European indices to seven month lows."

Asian markets provided a negative lead, slumping on Thursday on heightened concerns about the health of China's economy after Federal Reserve minutes from its last policy meeting clouded the outlook for US interest rates.

China's benchmark Shanghai stock index meanwhile closed down 3.42 per cent on Thursday, as worries persisted over the country's weak economy and currency, dealers said.

On currency markets, the US dollar had tumbled on Wednesday as the Fed dampened expectations for a rate rise in September and outlined its fears about the global economy, sending oil prices tumbling.

The minutes "did not shed much more in the way of solid news on the timing of the first rate hike which now might be complicated by Chinese developments and increasing market volatility", said Neil MacKinnon, economist at VTB Capital.

Dealers said markets remained pressured by uncertainties over China after the shock devaluation of the yuan last week added to fears that growth in the world's second biggest economy is slowing more than thought.

In Europe on Thursday, a source close to the Greek government confirmed that Athens had made its payment due to the ECB.

The payment was unlocked after European parliaments, including Germany's Bundestag, gave the green light to a third bailout package for Greece's stricken economy.

07/10/2015 07:12Sydney, Australia. 7 October,2015