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Europe Shares Tumble in Bleak Start to Final Quarter of 2022

  • Euro zone factory activity declines again in Sept - PMI
  • Credit Suisse at bottom of STOXX 600 on market jitters

Oct 3 (Reuters) - European shares slid on Monday, led by technology and financial stocks, as investors fretted about the economic health of the continent due to rampant inflation and subsequent aggressive interest rate hikes to tame it.

The region-wide STOXX 600 index had fallen 1.3% by 0829 GMT in a weak start to the final quarter of this year, also tracking a torrid Wall Street session on Friday.

Market sentiment soured after a survey showed manufacturing activity across the euro zone declined further last month as a growing cost of living crisis kept consumers wary while soaring energy bills limited production.

Italy's economy probably shrank in the third quarter and will continue to contract for the following two quarters, according to the latest Treasury forecasts, indicating the euro zone's third-largest economy is heading for a technical recession.

"The market is stuck in this period of fear. We see this reaction in the UK where the market should be benefiting from the government backing down on tax cuts... it tells you that things are starting to become interesting but require a significant amount of prudence," said Sebastien Galy, a senior macro strategist at Nordea Asset Management.

"A month or two ago the market was expecting to be able to forecast in next few quarters the bottom of the slowdown, potentially recession, in Europe or UK... (but) the picture has become more confusing as inflation has proven stickier and more robust than expected."

London's blue-chip FTSE 100 fared better than its regional peers, shedding 0.9% after Britain reversed plans to cut the highest rate of income tax that helped to spark a rebellion in her party and turmoil in financial markets.

The STOXX 600 has fallen 21.5% so far this year, as risk sentiment soured after the Russia-Ukraine war earlier this year jolted the region and sent gas prices sharply higher, leading to a spike in inflation and sparking concerns about central banks-induced recession.

Banking and tech stocks dropped 2.5% each to lead losses among the STOXX 600's sectoral indexes. However, a jump in crude prices on talks of OPEC+ weighing output cut helped the oil and gas sector outperform with a 1.8% rise.

Credit Suisse tumbled 9.2%, reflecting market concern about the Swiss bank as it finalises a restructuring due to be announced on Oct. 27.

Logitech International slid 6.1% after Exane BNP Paribas downgraded the Swiss computer peripherals maker, while Just Eat Takeaway dipped 5.9% after JP Morgan cut its rating.

Reporting by Devik Jain in Bengaluru; Editing by Subhranshu Sahu

Source: Reuters

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