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European stock markets dive to 16 year New Year low


Stock markets across Europe felt the full force of the mass sell-off witnessed within the Chinese market on Monday, recording the worst start to a new year in 16 years.

All of Europe’s major markets slipped into the red, after weaker than expected economic data from China panicked investors and led to a mass exit from the market.

The FTSE 100, London’s market, staged a temporary recovery this morning, but was back down to around opening level by mid-morning. The benchmark index started the day at 6,080.49, a drop of 2.39pc from opening yesterday. However, this morning it looked like some confidence had returned to investors as the market rebounded by 0.68pc to 6,134.15, but all gains were lost again by 10.30am.

Across Europe markets saw a similar trend, with the German DAX flat two hours into trading, and the CAC in Paris down another 0.2pc after losses on Monday. By 11am the Spanish IBEX was flat, after small early morning gains were wiped off.

This means that markets continue the trend of volatility seen in the second half of 2015, much of which was caused by unpredictable and turbulent data from China. China was again the major cause, after the People’s Bank of China injected almost $20bn into money markets; the largest amount since September.

However, the Chinese market, the Shanghai Shenzhen CSI300 closed marginally higher, up 0.3pc to 3,478.78. This is after new data from China revealed that for the tenth consecutive month factory output had contracted in December, leading to 7pc being wiped off the local market on Monday, and volatility that ensued across world markets.

Mike McCudden, of Interactive Investor, said: “Equities are enjoying what appears to be a brief respite from the storm this morning, but any argument to push on up from here will not hold much water in the short-term.

“Those who put decreasing volatility on their Santa wish list have been left very much disappointed with weak global growth and geopolitical tension continuing to dominate investor sentiment. Indeed, the VIX (which measures volatility in stock prices) is starting to creep higher once again.”

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