European shares extend sell-off on China concerns

In currency markets, the euro was steady against the U.S. dollar at $1.1023.

European shares extended a sell-off on Wednesday from the previous session as concerns over China’s currency devaluation weighed on global stock markets and hit European exporters.

The move in the yuan has hit European companies who rely on Chinese demand for their products particularly hard.

France’s CAC 40 index erased 3.4% to 4,925.43, while the U.K.’s FTSE 100 index lost 1.4% (http://www.marketwatch.com/storyno-meta-for-guid) to 6,571.19.

“While markets normally welcome any form of China stimulus with open arms, today’s move in the wake of truly very bad weekend trade data is being interpreted as admission of growth slowing by even more than those rather questionable official statistics are to have us believe”.

The 1.86 percent cut was the largest since the yuan was unpegged from the greenback in 2005.

Sectors with the highest exposure are basic resources, personal and household goods, technology, chemicals and autos.

Luxury good makers LVMH and Christian Dior lost about 5 percent each.

Glencore’s misfortune spread to other miners, with BHP Billiton falling by five percent on the day, for a total decline of 11 percent year to date, while Rio Tinto shed 3.1 percent on the day, down to 27 percent so far this year. “The move is seen as a desperate attempt at helping their exporters”.

The pan-European FTSEurofirst 300 index was down 1.8 percent at 1046 GMT, while the euro zone’s blue-chip Euro STOXX 50 index was down 2 percent.

FTSE 100 went up 17.73 points or 0.26 percent to close at 6,736.22.

Aside from China, focus was firmly on Greece, with Athens and its creditors set to put the finishing touches to a third global bailout agreement aimed at saving the eurozone nation’s stricken economy from collapse. “What we don’t have is a political agreement”. Greece needs a deal by August 20 at the latest, when it has a debt repayment of a little more than 3 billion euros to make to the European Central Bank.

German investor sentiment meanwhile dropped this month owing to nagging geopolitical uncertainty clouding the outlook for Europe’s top economy, a leading survey found on Tuesday.