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European stocks hit one-month low as virus fears dominate

10/27/2020 | 04:45am EST

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* Miners hit by slew of rating downgrades

* HSBC surges on signalling overhaul

* BP reverses gains, oil sector at 7-month low

Oct 27 (Reuters) - European stocks extended losses on Tuesday as worries about the economic fallout of tighter coronavirus restrictions on the continent overshadowed some better-than-expected earnings reports.

The pan-European STOXX 600 index fell 1% to a one-month low, on rising infections in the United States and Europe and fading hopes of a U.S. stimulus package before the presidential election.

Focus will now be on Thursday's meeting of the European Central Bank for clues on monetary stimulus for the bloc.

"The ECB is widely expected to stand pat until the next meeting. Macro forecasts won't be updated until the December 10 meeting, but the bank will have to acknowledge the deteriorating outlook now," said Win Thin, global head of strategy at Brown Brothers Harriman.

"There's a small risk of more jaw boning against the stronger euro."

Germany's DAX shed 0.9% to hit four month lows, while France's CAC 40 fell 1.8% to a one-month trough as the country grappled with a runaway infection rate.

German Chancellor Angela Merkel is planning a "lockdown light" in Europe's largest economy that would mainly focus on the closure of bars and restaurants to slow down a second wave of infections, newspaper Bild reported.

Losses on the UK's FTSE 100 were limited by a 3.4% jump in Europe's biggest bank HSBC after the lender signalled a pandemic-induced overhaul of its business model, accelerating plans to shrink in size and slash costs.

But shares in oil major BP fell 2.1%. The company swung back to a small profit in the third quarter, but also warned of pandemic-related uncertainties. Europe's oil and gas sector index touched its lowest level in seven months.

Spanish bank Santander closed down 1.3% as it tracked broader negative investor sentiment in the market. It had earlier in the day logged gains of up to 5% after saying it expects 2020 core profit to beat market expectations, helped by additional cost savings of 1 billion euros.

Spain's IBEX index fell 2.1%, also on worries about the economic impact of coronavirus-related curbs.

Third-quarter earnings from Europe remain largely positive. Out of the 27% of the STOXX 600 companies that have reported so far, 73% have beat profit expectations, according to Refinitiv data.

French consulting and IT services provider Capgemini jumped 2.1% after confirming its full-year targets.

Tobacco group Swedish Match climbed 3.5% as it reported a bigger-than-expected rise in quarterly profit on the back of higher sales of smokeless products.

Miners fell 1.4%, dragging markets lower, after Liberum analysts downgraded stocks of Rio Tinto, Antofagasta and KAZ Minerals.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila and Susan Fenton)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ANTOFAGASTA PLC 0.04% 1315 Delayed Quote.43.00%
BANCO SANTANDER, S.A. 4.75% 2.68 Delayed Quote.-28.43%
BP PLC 4.74% 267.15 Delayed Quote.-45.92%
CAC 40 0.02% 5583.01 Real-time Quote.-6.63%
CAPGEMINI SE -1.51% 114.25 Real-time Quote.6.52%
DAX -0.52% 13313.24 Delayed Quote.1.01%
HSBC HOLDINGS PLC 3.02% 418.35 Delayed Quote.-31.39%
IBEX 35 0.98% 8220.8 Delayed Quote.-14.75%
KAZ MINERALS PLC 1.18% 650.8 Delayed Quote.21.04%
LONDON BRENT OIL 2.16% 48.24 Delayed Quote.-27.74%
MSCI UNITED KINGDOM (STRD, UHD) 1.99% 998.934 Real-time Quote.-17.73%
RIO TINTO PLC 4.83% 5239 Delayed Quote.10.98%
STOXX EUROPE 600 -0.05% 391.69 Delayed Quote.-5.76%
SWEDISH MATCH AB -2.10% 660.6 Delayed Quote.39.77%
WTI 2.67% 45.27 Delayed Quote.-26.33%
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