European Stocks Sag on German Data

LONDON â€”  European stocks on Wednesday suffered their biggest losses since early August after a gauge of German business confidence slid to a six-month low.

The German DAX stock index tumbled 168.50 points, or 4.4%, to 3,682.84, the largest one-day drop since it fell 5.7% on Aug. 5.

Britain’s FTSE-100 fell 4% to 4,274.00, its biggest loss since a 4.8% drop Aug. 1.

The Bloomberg European-500 index slid 3.4%, also the largest decline since Aug. 1.

France’s main index lost 4.2%, while the Spanish market fell 3.4%.

Europe’s markets had rallied with Wall Street since July 25, and have been following the U.S. market lower since Friday.

“Macroeconomic data in the U.S. and Europe have shown that things aren’t as rosy as the market was hoping in the past few weeks,� said Manlio Bonafede, who helps manage $1 billion at Banca Leonardo in Milan. “Also, some companies have made it clear that it’s still too early to talk of any kind of sustained recovery at the moment.�

In Germany, the Ifo Institute said Wednesday that its index of business confidence this month declined more than economists forecast, to the lowest level since February. It was the third consecutive monthly drop. The index covers 7,000 companies in the western part of the country.

Germany, which accounts for almost a third of the Continent’s economy, “is a drag on European growth,� said Arnold Gast, who helps manage $2.7 billion at Theodoor Gilissen Bankiers in Amsterdam.

Trading volume picked up across Europe on Wednesday, lifting volume in blue-chip shares to the third heaviest this month.

European oil giants were lower on expectations that the Organization of the Petroleum Exporting Countries would agree to boost output when it meets Sept. 19.

Also, new woes for North American telecom company Nortel Networks weighed on European telecom shares. Stock of Alcatel, Europe’s biggest phone equipment maker, sank 8.8% in Paris.

The Bloomberg European-500 index is down 23.2% year to date in euro terms. That’s worse than the 20.1% drop in the U.S. Standard & Poor’s 500. Adjusted for the dollar’s decline, the loss in the Bloomberg European index is 15.5% for an American investor in those shares.