EUROPE MARKETS: Europe Stocks Slide To 2013 Low On Growth Concerns

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Europe's top stock index slumped to its lowest close of 2013 on Wednesday, after Bundesbank President Jens Weidmann warned the euro-zone's economic recovery could take a decade, adding to investors' worries about global growth.

The Stoxx Europe 600 index fell 1.5% to settle at 283.73.

The decline marked the fourth straight day of losses, as worries over a slowdown in global growth resurfaced after disappointing data from China and the U.S earlier in the week.

"The rot may have been stemmed in the short term by positive [quantitative-easing] comments from some senior Fed officials, but there is a real sense that investors are starting to grow weary as underlying economic data continues to disappoint," said Mike McCudden, head of derivatives at Interactive Investor, in a note.

"Without much by way of fresh data to direct investors today markets may drift as they look with caution towards another Spanish bond auction tomorrow and weekly jobs data from the U.S.," he said.

Worries over growth in Europe sent bourses deeper into red territory in the afternoon, after Bundesbank President Jens Weidmann, in an interview with The Wall Street Journal, warned the region could take as much as a decade to recover from debt crisis. He also signaled the European Central Bank could cut interest rates if needed.

The remarks come in the wake of weakening European economic data that has called into question prospects for a return to growth in the euro zone later this year. Read: Europe faces threat of full-fledged depression

U.S. stocks traded lower on Wall Street.

German selloff

German stocks were among hardest hit in Europe, as vague rumors that the country could face a sovereign downgrade added to fears in an already sensitive market.

The DAX 30 index lost 2.3% to 7,503.03, the lowest closing level since early December.

Shares of BASF SE shaved off 3.8%, after Nomura cut the chemicals firm to neutral from buy.

"It took only some speculation of a German downgrade to send the DAX plunging sharply lower, before it partially recovered. The sensitivity of different markets to negative surprises seems to have risen sharply recently, particularly in Europe and the broad EM spectrum. It suggests that the period of consolidation is continuing," said Sebastien Galy, senior currency strategist at Société Générale, in a note.

Gregor Kuhn, markets strategist at IG Markets in Frankfurt, said that the selloff in the DAX likely was caused by a big institutional investor selling large holdings, in an effort to get liquidity after the recent tumble in gold prices.

However, he didn't expect to see a larger decline in the near term.

"It is consolidating on quite a high level and it isn't something that is a surprise. It was time for a correction after the impressive rally we've seen since last summer," he said.

"I don't think it'll go much deeper, because we'll see some technical support zones. Between 7,200 and 7,440 there is quite stable support, but if we break through that, the next support level is at 7,000," he added.

Earnings

The earnings calendar in Europe featured some U.K. heavyweights, with supermarket retailer Tesco (TSCDY)reporting its first drop in earnings in 19 years, as write-downs wiped out much of the profit. Shares were down 3.9%.

Heavyweight mining firm BHP Billiton PLC (BHP) dropped 3.4% after saying iron-ore production was 5% lower in third quarter compared with the prior quarter.

On a more upbeat earnings note, shares of Burberry Group PLC (BURBY) gained 1.8%. The luxury retailer reported a rise in second-half comparable sales, helped by strong sales in outerwear and men's clothing.

The FTSE 100 index dropped 1% to 6,244.21.

On the data front in the U.K., the Office for National Statistics said unemployment in the first quarter rose to 7.9% in the three-month period to February, up 0.2 percentage points from September to November last year.

Additionally in the U.K., minutes from the Bank of England's April meeting showed the nine-member policy-setting committee voted unanimously to keep rates at a record low 0.5%, while three members, including Gov. Mervyn King, voted for an increase in asset purchases.

France's CAC 40 index gave up 2.4% to 3,599.23, with oil major Total SA (TOT), down 2.6%, tracking a slide for oil prices.

Shares of European Aeronautic Defence & Space Co. jumped 4.9%, as the company said it bought back 1.56% of its own shares held by the French state. Additionally, German car maker Daimler AG said it sold its entire 7.5% stake in EADS. Daimler shares dropped 1.9%.

Outside the major indexes, shares of ASML Holding NV (ASMLD) gained 2.5%, after the chip-equipment maker reported first-quarter sales ahead of market expectations.

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