European stocks pulled by Mercedes, defense stocks up after Poland blast

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By Shreyashi Sanyal

(Reuters) – European stocks fell on Wednesday, with Mercedes Benz Group leading losses in auto stocks, while an explosion in Poland dampened sentiment and lifted defense stocks.

The pan-European STOXX 600 index fell 0.4% at 09:24 GMT.

Auto stocks fell 2.8% to lead the sector declines and were heading for their biggest one-day percentage decline in nearly seven weeks.

Mercedes Benz Group AG fell 5.0% after a report said the German automaker cut prices for electric vehicles in China by up to $33,000 as sales lagged.

“For the (European) automotive sector, this kind of impact on sales comes from restrictions imposed by China and fears of a recession, although Europe and China have a good trade relationship,” Raed said. Alkhedr, chief market analyst at Equiti.com.

US President Joe Biden has said a missile that killed two people in Poland was likely not fired from Russia, after an emergency meeting of NATO leaders called to discuss the strike.

“It is the worst when we hear such news, even if it does not come from Russia, it still causes uncertainty in the markets and the European market is particularly fragile in the run-up to a confirmed recession. next year due to the energy crisis and geopolitical tensions,” Alkhedr said. said.

Europe’s aerospace and defense sector climbed 0.9% after news of the explosion broke.

Shares of German arms maker Rheinmetall, Italian Leonardo, French defense and technology group Thales, Sweden’s SAAB and Britain’s largest defense company BAE Systems rose between 1.7% and 3, 5%.

The STOXX 600 has fallen more than 11% so far this year and although this is less than the 16% drop in the S&P 500 index, market participants remain cautious about investing in Europe .

Multiple data points signaled a eurozone recession amid the European Central Bank’s cycle of aggressive monetary tightening to control record inflation.

Investors will focus on the UK budget on Thursday, when UK Finance Minister Jeremy Hunt is likely to announce tax hikes and spending cuts to control rising prices as household energy bills soar and food prices pushed UK inflation to a new 41-year high in October.

London’s FTSE 100 index rose 0.3%.

Air France-KLM plunged 10.6% after the company announced it was offering subordinated bonds convertible into new shares for 300 million euros ($312 million).

Italy’s top commercial broadcaster MediaForEurope (MFE) fell 2.5% after saying its operating profit fell 65% in the first nine months.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Rashmi Aich and Dhanya Ann Thoppil)

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