European shares fall, led lower by carmakers and luxury stocks

Futures for the Euro STOXX 50, Germany’s DAX, France’s CAC and Britain’s FTSE 100 all fell by 0.4-0.5 percent. The British pound was down 0.2% against the dollar.

Chris Jefferies, an asset-allocation strategist at Legal & General Investment Management, said the selloff is being driven by worries about what China’s devaluation of the yuan “means for the competitiveness of the West versus the East”.

“Disappointing Chinese export figures over the weekend have increased the likelihood of more government and central bank stimulus substantially leading to renewed optimism that the worst will soon be behind the world second largest economy”, said Markus Huber, senior analyst at Peregrine & Black.

U.S. stocks traded more than 1 percent higher on Monday, bouncing from sharp declines last week, as encouraging developments in Greece and a Warren Buffett acquisition boosted sentiment.

The devaluation of the yuan “represents a long overdue, albeit partial, fightback in the global currency wars that have sapped China’s competitiveness”, said Richard Iley, an economist at BNP Paribas SABNPQY 0.45 % .

Greek companies were among the biggest gainers on the Stoxx Europe 600, with National Bank of Greece up 3 per cent and the Greek Organization of Football Prognostics up 7.6 per cent.

Greece bucked the trend, however, with the Athex Composite up 1.6% as it emerged the debt-ridden nation has finally reached an agreement with its creditors on a third bailout.

In London, engineering group Meggitt was on the front foot after saying it has agreed to acquire the advanced composites business of Cobham for $200m in cash finance from existing resources, in a deal that is expected to be immediately earnings-enhancing.

Commodity currencies such as the Australian, the New Zealand and Canadian dollars retreated and the euro also fell against the greenback as China’s move caught traders off guard. U.S. crude gained almost 2 percent, with prices pushing towards $45 per barrel.