European stocks dive to two-month lows on China worries
By Susan Mathew
(Reuters) - European shares sank to a two-month low on Monday as a global sell-off spurred by trade tensions deepened, sending China's yuan to its lowest in more than a decade and sinking trade-sensitive mining, luxury and technology stocks.
The pan-European STOXX 600 index <.STOXX> fell 2.3%, which, taking into account Friday's losses, made for the biggest two-day drop in more than three years as traders dumped shares in favour of perceived safe-havens like government bonds.
Mining groups Rio Tinto (NYSE: RIO) and BHP
The commodities-linked stocks index <.SXPP> fell 2.9% to its lowest in seven months.
The yuan's move on Monday was viewed as a clear sign China would not back down in the face of President Trump's threat of new tariffs on imports, meaning the trade conflict may get worse. Trump himself called the move "currency manipulation" and a "major violation".
"Today's move puts added pressure on the equity markets globally because obviously ... China is not giving in, China is fighting back," said Andre Bakhos, Managing Director at U.S.-based New Vines Capital. "Nobody likes this uncertainty."
Trump's threat last week to slap 10% tariffs on another $300 billion in Chinese imports, plus disappointment about the U.S. Federal Reserve's rhetoric, have halted what had been a steady recovery for stock markets since a sell-off in May.
Luxury stocks such as Louis Vuitton owner LVMH
Asia-focused bank HSBC
Gas producer Linde (NYSE: LIN) rose 2.5% and was the biggest boost for the STOXX 600 after quarterly results topped forecasts and underpinned a second increase to full-year forecasts this year.
(Reporting by Agamoni Ghosh, Shreyashi Sanyal and Susan Mathew in Bengaluru; editing by Patrick Graham and Jane Merriman)