European Markets Kicked Off 2016 With A Sharp Sell-Off

(RTTNews) - The European markets sank sharply on the first trading day of the new year due to global economic concerns. Weak manufacturing data in China caused the Chinese market to plunge nearly 7 percent. The market was halted for the rest of the trading session as a newly launched circuit breaker mechanism kicked in for the first time.

China's manufacturing sector continued to contract in December on weak orders and a renewed fall in output, reflecting the complexity in achieving its ambitious growth target for 2015.

The Caixin Purchasing Managers' Index fell unexpectedly to 48.2 in December from 48.6 in November, survey data from Markit revealed Monday. It was forecast to rise marginally to 48.9.

At the same time, the official manufacturing PMI came in at 49.7, slightly up from 49.6 in November.

Crude oil prices were also in focus due to concerns that the rift between Iran and Saudi Arabia might disrupt supplies from the Middle East. Saudi Arabia cut diplomatic ties with fellow OPEC member Iran on Sunday after its embassy in Tehran was attacked. Iranians were protesting the Saudi execution of prominent Shiite Muslim cleric Nemer al-Nemer.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 3.16 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 2.61 percent.

The DAX of Germany dropped 4.28 percent and the CAC 40 of France fell 2.47 percent. The FTSE of the U.K. declined 2.39 percent and the SMI of Switzerland finished lower by 1.83 percent.

In Frankfurt, utility RWE sank 7.43 percent and peer E.ON fell 6.11 percent. BMW declined 5.96 percent and Daimler dropped 5.26 percent. Volkswagen also finished lower by 5.46 percent.

Deutsche Bank decreased 4.97 percent and Commerbank lost 2.24 percent.

In Paris, Alcatel-Lucent dropped 1.18 percent, after French authorities granted approval to its merger with Nokia.

Peugeot fell 4.54 percent and Renault weakened by 3.64 percent.

LVMH decreased 3.93 percent and Kering surrendered 3.89 percent.

In London, Shire declined 5.21 percent on rumors that it is close to a deal to purchase U.S. company Baxalta.

Mining stocks were under pressure on China concerns. Anglo American dropped 7.21 percent and Glencore sank 5.76 percent. Antofagasta surrendered 5.03 percent and BHP Billiton lost 3.16 percent.

However, gold stocks were among the gainers, due to the yellow metal's safe-haven appeal. Randgold Resources climbed 2.41 percent and Fresnillo added 0.21 percent.

Fiat Chrysler tumbled 36.92 percent in Milan after the company spun off its Ferrari brand.

Eurozone manufacturing activity expanded at the fastest pace since April 2014, final survey data from Markit showed Monday. The final manufacturing Purchasing Managers' Index rose to 53.2 in December from 52.8 in November. The flash score was 53.1.

Germany's manufacturing sector expanded more than initially estimated in December, final data from Markit showed Monday. The Markit/BME manufacturing Purchasing Managers' Index rose to 53.2 in December from 52.9 in November. The reading signaled the strongest improvement in the sector for four months. The flash PMI reading was 53.

Germany's consumer prices rose for a third straight month in December, but the pace of increase eased, defying expectations for an acceleration, preliminary data from Destatis showed Monday. The consumer price index climbed 0.3 percent year-on-year following 0.4 percent increase in November, which was the fastest pace in six months. Economists had expected a 0.6 percent gain.

German employment growth, which has lasted over a decade, continued in 2015 with the number of those with jobs setting a reunification-high, largely helped by a resilient economy and immigration of foreign workers.

The number of residents in employment rose by 324,000 persons or 0.8 percent to 43 million last year, provisional data from Destatis showed Monday. The pace of increase slowed slightly from the 0.9 percent registered in the previous year.

Meanwhile, the number of unemployed fell by 140,000 persons or 6.7 percent to 1.95 million. The figure fell below 2 million for the first time since the German reunification.

The ILO unemployment rate declined to 4.3 percent from 4.7 percent, which was just below the EU average rate.

France's manufacturing sector activity expanded less than initially estimated in December, final data from Markit showed Monday. The manufacturing Purchasing Managers' Index rose to 51.4 in December from 50.6 in November. It was the highest reading since March 2014 but below the flash score of 51.6.

The U.K. manufacturing sector growth eased unexpectedly in December, due to a further slowdown in growth of output and new orders, survey data from Markit Economics showed Monday.

The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index for manufacturing fell to 51.9 in December from 52.5 in the previous month. Economists had expected the index to improve to 53.0.

U.K. mortgage approvals rose to a 3-month high in November, the Bank of England reported Monday. The number of mortgages approved for house purchases rose to 70,410 in November from 69,867 in the prior month. It was forecast to rise to 69,900. It was the highest level since August.

Indicating a second consecutive month of contraction in U.S. manufacturing activity, the Institute for Supply Management released a report on Monday unexpectedly showing a drop by its manufacturing index in the month of December.

The ISM said its purchasing managers index edged down to 48.2 in December from 48.6 in November. The modest drop came as a surprise to economists, as the consensus estimate called for the index to inch up to a reading of 49.2.

Construction spending in the U.S. unexpectedly decreased in the month of November, according to a report released by the Commerce Department on Monday. The report said construction spending fell 0.4 percent to an annual rate of $1.123 trillion in November from the revised October estimate of $1.127 trillion. Economists had expected spending to rise by 0.7 percent.