Global Stocks Fall After Yuan Move -- 3rd Update

By Christopher Whittall 

China's devaluation of its currency sent global stocks lower Tuesday, hitting the shares of companies that export to China or compete with Chinese rivals especially hard.

A weaker yuan could hurt the competitiveness of firms outside China by making their goods and services relatively more expensive, while companies that generate sales in China could find revenue generated in yuan is worth less in their home currency.

Luxury goods firms, car makers and mining companies, which are highly sensitive to Chinese demand, came under the most intense pressure.

In Europe, shares in LVMH Moët Hennessy Louis Vuitton SE and Gucci-owner Kering SA fell more than 3%. Porsche Automobil Holding SE and Daimler AG both lost more than 4%, dragging Germany's export-heavy DAX index to a 1.6% decline.

Shares in BHP Billiton PLC were down 2.7% and ArcelorMittal SA lost 1.6%.

More broadly, the currency devaluation marked the latest round in Beijing's efforts to prop up a slowing economy, further fanning concerns over the effect on global growth.

"With regard to its impact on growth, it feels at best like this is a zero-sum game: what is good for growth in China is unfortunately bad for everybody else," said Bill McQuaker, co-head of multiasset at Henderson Global Investors, which oversees GBP82 billion in assets.

The pan-European Stoxx Europe 600 index was down 0.9% midway through the session.

U.S. stock futures indicated a 0.4% opening decline for the S&P 500. Changes in futures aren't necessarily reflected in market moves after the opening bell.

Chris Jeffery, an asset-allocation strategist at Legal & General Investment Management, said the selloff is being driven by worries about what China's devaluation of the yuan "means for the competitiveness of the West versus the East."

Most Asian bourses fell and currencies sank in response to the People's Bank of China's move as the world's second-largest economy sags.

Japan's Nikkei 225 index fell 0.4%. The Shanghai Composite Index was flat.

"The market is still trying to work out if this is a one-off move or the start of something more significant," said Talib Sheikh, a multiasset fund manager at J.P. Morgan Asset Management, which oversees $1.8 trillion in assets.

"We think the risks are they'll have to engage in further measures" to weaken the currency, he added.

Athens stocks bucked the trend after progress toward a third bailout for Greece.

The Athex Composite index was 1.2% higher. Greek stocks saw some of the largest gains in Europe, with National Bank of Greece SA up 6.5% and Hellenic Telecommunications Organization SA up 1.2%.

Greece and its international creditors reached an agreement in principle to provide the country with a bailout worth as much as EUR86 billion ($94.4 billion), but some details remained unresolved, according to a spokeswoman for the European Commission and a Greek government official.

In currency markets, the euro was up slightly against the U.S. dollar at $1.1035. The Japanese yen fell 0.3% against the buck.

Brent crude oil fell 1.4% to $49.71 a barrel. Gold rose 0.7% to $1,111.60 a troy ounce.

Tommy Stubbington contributed to this article.

Write to Christopher Whittall at [e-mail]