Cars and planes carry European stocks lower

The euro neared a two-year peak against the dollar on Monday, while London stocks were hit by airline sector turbulence and Frankfurt skidded lower on worries over collusion by carmakers.

London's FTSE 100 index ended the day down 1.0 percent, with air carriers bearing the brunt after Ireland's low-cost Ryanair posted soaring first-quarter profits but hinted at a price war.

"Ryanair’s announcements that they may have to cut airfares further has sent their stock lower and that of easyJet and BA’s parent, International Consolidated Airlines too," said market analyst David Madden at CMC Markets in London.

"Like with the UK supermarket price wars, it's the customers that benefit and not the shareholders," he added.

In London, EasyJet shares tumbled 2.8 percent while shares in British Airways parent IAG descended 0.5 percent.

In Dublin, shares in Ryanair shed 1.1 percent.

While the strong euro hurts eurozone exporters, French stocks managed a 0.2 percent gain on the day, mainly due to a survey on private sector business activity showing a pickup in manufacturing.

Overall for the eurozone, IHS Markit said its July Composite Purchasing Managers Index (PMI) came in at 55.8 points, the lowest reading in six months. A reading above 50 indicates economic expansion.

"After several months of respectable growth, the manufacturing and services industries in the region are still expanding, just at a cooler rate," said Madden.

Frankfurt stocks were hit by worries that German carmakers could face huge fines if allegations they colluded illegally for decades prove true. 

News weekly Der Spiegel reported Friday that German carmakers Volkswagen, Audi, Porsche, BMW and Daimler had secretly worked together from the 1990s onwards on huge areas of car development, construction and logistics -- including how to meet increasingly tough emissions criteria in diesel vehicles.

Shares in Volkswagen shed 1.4 percent, Daimler was down 2.7 percent while BMW was the worst performer on the DAX 30 as it slumped 2.8 percent.

In Asian trade, the European single currency rallied to $1.1684 -- the highest level since August 2015 -- before profit taking set in.

The single currency has extended last week's rally against the greenback after European Central Bank boss Mario Draghi said policymakers would address its vast stimulus programme by the autumn, fuelling speculation they would start winding it in.

The dollar has meanwhile been handicapped by US political worries and the Federal Reserve's monetary policy outlook.

 

- 'Unwinding of Trump trade'? -

 

"The euro is generally being boosted by the belief that the ECB will announce tapering before the end of the year," Oanda analyst Craig Erlam told AFP.

"While the Fed has openly been on a tightening path, the recent commentary has suggested the pace could slow.

"With President Donald Trump getting nowhere on his growth agenda, the need for the Fed to keep raising at the current rate has reduced. What we are effectively seeing is the ongoing unwinding of the Trump trade, from a rates perspective."

Uncertainty surrounding Trump's presidency continues to drag on sentiment, and Wall Street's three main indexes down in late morning trading, with investors looking to this week's Fed policy meeting and the release of big-name earnings results.

Asian stocks however rose in value.

 

 - Key figures around 1530 GMT - 

 

Euro/dollar: DOWN at $1.1645 from $1.1663 at 2100 GMT Friday

Pound/dollar: UP at $1.3028 from $1.2992

Dollar/yen: DOWN at 111.04 yen from 111.12  

London - FTSE 100: DOWN 1.0 percent at 7,377.73 points (close)

Frankfurt - DAX 30: DOWN 0.3 percent at 12,208.95 (close)

Paris - CAC 40: UP 0.2 percent at 5,127.70 (close)

EURO STOXX 50: DOWN 0.1 percent at 3,447.14

New York - DOW: DOWN 0.0.3 percent at 21,511.76

Tokyo - Nikkei 225: DOWN 0.6 percent at 19,975.67 (close)

Hong Kong - Hang Seng: UP 0.5 percent at 26,846.83 (close)

Shanghai - Composite: UP 0.4 percent at 3,250.60 (close)

Oil - Brent North Sea: UP 0.52 cents at $48.83 per barrel

Oil - West Texas Intermediate: UP 61 cents at $46.38

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Source: AFP