European markets lose ground as banks weigh

European markets lost ground on Friday as investors sold out of heavyweight banking stocks, forcing the FTSE 100 lower by 1.6%, whilst the DAX and CAC both fell over 2%.

Banks have been the focus of the selling today as investors became concerned over a property market correction in China, which could have long lasting consequences for banks who have high lending exposures in the region. In Asian trading early this morning banks weighed on exposure concerns and in London trading today we have seen two banks with most exposures to Asia – Standard Chartered and HSBC – both weigh, with their respective share prices falling 4%-5%.

Luxury goods retailers have also seen negative share price swings today in reaction to China as shareholders continue to become concerned that the region’s high demand for luxury items is starting to wane amidst a slowdown in economic activity. Burberry shares lost another 5% today, meaning that the retailer’s share price has lost 16% in just three days’ trading. Similarly bearish moves were seen for peer luxury goods makers Swatch Group and Richemont.

With today’s session marking the end of the quarter, we could also see a number of investors looking to settle and re-evaluate their portfolios for the new quarter, which could also trigger some more choppy trading in Europe today after yesterday’s equally choppy session.

Mining shares also weighed on trading, with the sector losing another 1% on Friday, meaning that all of Tuesday’s strong bounce in mining shares has been eradicated.

The afternoon session will see investors maintain a close eye on US economic data, with personal income and spending, Chicago PMI and economic sentiment all due out in the early afternoon and likely to have a strong influence on how European trade finishes the week.