Europe shares extend drop as slowdown fears take hold

The DAX is some 16 percent below a record high of 12,390.75 set in April and at its lowest level since January.

European equities closed largely lower on Tuesday as investors were left on edge shrug off negative sentiment from Asia, after Chinese stocks tanked again.

The European single currency was higher despite renewed unrest in Greece, where Prime Minister Alexis Tsipras announced his resignation on Thursday and called for snap elections.

This, following the devaluation of the yuan last week, sparked further uncertainty in the Chinese market, with investors constantly witnessing huge fluctuations in spite of efforts by Beijing to warm the market.

All eyes were also on China as Shanghai’s main stocks index closed down 4.27 percent on Friday. But crude recovered later in the day, as did some energy names.

London’s stock market got a boost from the tumble in the Kazakh tenge currency, sending shares in Kaz Minerals up 20 per cent thanks to an effective drop in running costs for a business selling US dollar-denominated commodities.

“The great worry is that China will undergo a dramatic drop in the rate of growth, and the knock-on effect to Europe will damage the recovery”, said David Madden, market analyst at IG, in a note.

Minutes from the US Federal Reserve’s July meeting dented expectations for a rate hike in mid-September, amid worries over lagging inflation and slowing growth in China that have hit risk assets around the world.

Miners shine: Mining shares found some relief after being yanked lower in recent sessions. Anglo American PLC (AAL.LN) rose 2.7%, and Fresnillo PLC (FRES.LN) gave up 2.9%.

The U.K.’s FTSE 100, which is heavily weighted by commodity stocks, still lost 0.6% to 6,367.89, and it’s stuck in its longest run of losses since November 2011 (http://www.marketwatch.com/story/london-stocks-stuck-in-longest-run-of-losses-in-more-than-4-years-2015-08-20).

“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 euro ($3.8 billion) loan payment made Athens to the European Central Bank Thursday.

On the corporate front, shares in Dutch grocery company Ahold rallied after it posted a 33% jump in second-quarter profit. For the year as a whole, the government expects national tax revenue to rise 3.7% from 2014.

Gamesa Corporacion Tecnologica S.A. (GAM.MC) plunged 10.2% after the Spanish wind turbine maker’s rating at Credit Suisse was downgraded to underperform from neutral.