EUROPE MARKETS: European Mining Stocks Hurt By China Growth Worries

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- Mining stocks led losses in Europe on Monday on concerns that China, a major natural-resources buyer, will tolerate slower economic growth, but Merck KGaA outperformed following the German company's agreement to buy life-science company Sigma-Aldrich, a U.S. company.

China woes: China's Finance Minister Lou Jiwei over the weekend said the world's second-largest economy is facing downward pressure, but the government won't "make major policy adjustments" because of changes in any individual economic indicator. The comments came ahead of Thursday's release by HSBC of its closely watched purchasing managers index for September.

"China's August data were simply too bad for the government not to respond, but top leadership could not be clearer that there will be no big easing," said Société Générale economist Wei Yao, in a Monday report. Beijing "would not want to send signals of big easing and cutting policy rates is a very loud signal," she said.

Markets: Mining stocks were the big losers at the start of week on the prospect that China will withhold further stimulus efforts in the foreseeable future. Shares of Glencore fell 4.9%, Rio Tinto (RIO) and BHP Billiton (BHP) gave up 3.8% and 3.5%, respectively, as prices for iron ore dropped, and Anglo American declined 3.1%.

The pan-European Stoxx Europe 600 index shed 0.5% to 346.69. The benchmark remained lower as European Central Bank President Mario Draghi in Brussels said recovery in the eurozone is losing steam, but didn't announce plans for full-blown quantitative easing.

Draghi's options for encouraging economic growth and beefing up low inflation levels in the eurozone seemed to narrow late last week after demand among regional banks for cheap, four-year loans from the European Central Bank turned out to be lackluster, with 255 banks borrowing a total of 82.6 billion euros in targeted long-term refinancing operations, or TLTROs. That amount fell short of expectations of roughly 100 billion euros.

Draghi said the amount taken up by banks in the LTROs was in line with the ECB's own expectations.

The euro (EURUSD) fell to $1.2831 after Draghi's comments, compared with $1.2840 on Friday.

German merger moves: But Merck KGaA topped the Stoxx 600, rising 4.4% after the German pharmaceutical company said it plans to buy Sigma-Aldrich (SIAL) for $17 billion in a move to bulk up its position in the life science industry.

But shares of German engineering heavyweight Siemens slipped 0.5% following plans to acquire U.S. oil-equipment maker Dresser-Rand Group(DRC) for $7.6 billion.

Germany's DAX fell 0.5% to 9,749,54, the U.K.'s FTSE 100 lost 0.9% as supermarkets chain Tesco tumbled 12%, and France's CAC 40 declined 0.4% to 4,442.55.

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