By Peter Nurse
Equity markets closed lower in Europe on Monday, with investors
nervous given the unrest in Hong Kong and ahead of the latest
meeting of the European Central Bank.
The Stoxx Europe 600 dropped 0.4%, with France's CAC 40 ending
down 0.8% and Germany's DAX index 0.7% lower. The FTSE 100 index in
London outperformed, ending down just 0.04%.
The continuing crackdown on Hong Kong's pro-democracy protests
has added to the continuing geopolitical worries in Ukraine and the
Middle East.
The Hang Seng Index ended down 1.9% at 23,229.21, while the Hong
Kong dollar fell to its lowest level in six months, as the standoff
between protesters and the police from the weekend continued
Monday. Stocks in Hong Kong had rallied since early May to hit a
year-to-date high of 25,317.95 on Sept. 3, but have since lost 6.5%
as of Friday's close. The market is the world's sixth-largest stock
market in terms of market capitalization.
Adding to the negative tone in Europe were losses on Wall
Street, as U.S. investors took stock following Friday's strong
gains after data showed the U.S. economy grew at its fastest pace
in more than two years in the second quarter.
Returning to Europe, German inflation stabilized at a very low
level in September, with the annual rate of inflation in Europe's
largest economy just 0.8%.
The European Unions's statistics agency will release data for
the 18-member eurozone Tuesday. Many analysts expect a decline from
0.4% to 0.3% in September, keeping the pressure on the European
Central Bank ahead of Thursday's meeting.
"We expect ECB President [Mario] Draghi to stay on the dovish
side at the ECB meeting amid no policy change, although we expect
further measures to be announced by Q1 2015," said analysts at
Barclays in a note to clients.
In the foreign exchange markets, the New Zealand dollar touched
a 15-month low Monday after data showed that the country's central
bank sold large amounts of the currency in August, increasing
expectations of further intervention.
The currency fell sharply after data was released showing the
Reserve Bank of New Zealand sold a net 521 million New Zealand
dollars ($406.4 million) in August--the most since July 2007 and
significantly more than the NZ$2 million it sold in July--touching
$0.7708, its weakest since late June 2013, from around $0.7828 just
before the release.
In commodities markets, gold gained 0.3% to $1,218.70 an ounce.
Brent crude oil was flat at $97.00 a barrel.
In corporate news, shares in Allianz AG climbed 0.2%,
outperforming a negative market and rebounding from sharp losses on
Friday after renowned asset manager Bill Gross resigned from Pimco,
a subsidiary of the German insurer.
Elsewhere, shares of Balfour Beatty PLC slumped over 15% after
the international infrastructure group warned of a profit
shortfall, its fifth warning in two years.
Chao Deng and Lucy Craymer contributed to this article.
Write to Peter Nurse at peter.nurse@wsj.com