EUROPE MARKETS: European Stocks Continue Descent; BG, Vodafone Slump

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets moved sharply lower on Monday, as continued uncertainty about growth in emerging markets triggered a flight out of riskier assets such as equities.

The Stoxx Europe 600 index lost 0.8% to 322.20, on track for the lowest closing level since Dec. 20.

On Friday, the benchmark ended its worst week since June, after renewed worries about growth in China spurred a sharp selloff in emerging-markets currencies. Currencies in those regions were still dropping on Monday, with the Turkish lira extending its record-breaking slide and South Africa's rand falling further. Asia markets closed in deep-red territory, while U.S. stock futures pointed to a higher start on Wall Street, following steep declines last week.

Adding pressure on the pan-European index on Monday, shares of BG Group PLC sank 15% after the energy company warned its oil-and-gas output this year will be lower than previously forecast partly due to turmoil in Egypt. The group declared "force majeure" on contracts in Egypt, because the country's government had not honored BG's share of gas from fields, leading to high levels of export volumes being diverted back to the local market.

Vodafone Group PLC (VOD) dropped 5.9% after AT&T Inc. (T) said it has no intention of making an offer for the U.K. telecoms firm. In other Vodafone news, British newspaper the Times reported that the group has approached the private-equity owners of a Spanish broadband operator about a potential 7 billion pound ($11.6 billion) offer. A representative from Vodafone declined to comment on the report.

On a more upbeat note, shares of LM Ericsson Telefon AB gained 2.5% after it signed a deal with Samsung Electronics Co. on global patent licenses, putting an end to related litigation between the two companies.

Upbeat German business-confidence data failed to lift the broader trading mood. The Ifo Business Climate index rose for a third time in a row in January to reach a two-and-a-half-year high, while the assessment of the current business situation in Germany climbed to its highest level since June 2012.

The DAX 30 index , however, gave up 0.3% to 9,367.25. Elsewhere, the U.K.'s FTSE 100 index slid 1.4% to 6,569.09, and France's CAC 40 index dropped 0.1% to 4,157.93.

Shares of Lanxess AG rallied 8.5% in Frankfurt after the chemicals firm said chief executive Axel Heitmann will leave at the end of February, to be replaced by Matthias Zachert, currently chief financial officer at Merck KGaA . Merck shares slid 10%.

Shares of Banco Popolare SC dropped 13% after the Italian bank said on Friday it will to raise as much as EUR1.5 billion through a rights issue in an effort to boost capital. Other Italian banks mirrored the losses, with Banca Popolare dell'Emilia Romagna SCARL down 8.2% and Banca Popolare di Milano SCARL 5.6% lower.

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