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Europe markets plunge 3%; China and oil dominate

Arjun Kharpal
Europe markets plunge 3%; China and oil dominate

European stock markets faced severe selling on Friday, with major markets crashing in excess of 2.5 percent, following U.S. stocks lower as worse-than-expected Chinese economic data and a sharp drop in oil prices spooked traders.

The pan-European FTSEurofirst 300 (FTSE International: .FTEU3) closed down 3 percent, suffering its worst one day fall since October of last year.

London's main index, the FTSE 100 (FTSE International: .FTSE), finished 2.8 percent lower, closing out its worst weekly loss in 2015. Germany's DAX (^GDAXI) finished just shy of 3 percent while the French CAC (Euronext Paris: .FCHI) plunged 3.2 percent.

U.S. stocks plunged on Friday , extending a recent rout as concerns about slowing global growth continued to pressure investor sentiment.

Oil was testing investors' nerves on Friday, with light crude trading near $40 per barrel in afternoon trade on increased fears over the health of the world's greatest consumer, China. U.S. oil prices heading for its eighth week of falls running on Friday, the longest losing streak since 1986. Brent dipped down to $45.40 in afternoon trade, while light crude dropped over 2.5 percent, trading around $40.20.

Europe also followed big falls across Asian stock markets on Friday, after China August PMI data showed that factory activity in the world's second-biggest economy shrank at its fastest pace in more than six years. The Shanghai Composite (Shanghai Stock Exchange: .SSEC) closed over 4 percent lower.

In Greece, Prime Minister Alexis Tsipras resigned on Thursday and called snap elections in September, a move aimed at strengthening his grip on power. After fighting the last election on an anti-austerity platform, and spending most of his time in office attempting to reverse some of the changes made in Greece under its international bailout, he was eventually forced to back down in negotiations with the country's creditors in July. The Greek stock market reacted negatively, down 2.5 percent.

In individual stocks news, Spain's Banco Sabadell (Mercado Continuo: SAB-ES), which on Friday said it had completed the acquisition of 100 percent of Britain's TSB bank (:TSB-GB). TSB was formerly part of Lloyds Banking Group (London Stock Exchange: LLOY-GB), which was bailed out by the U.K. government during the 2008 global financial crisis. Shares in the bank fell in line with the broader market, down over 3 percent.

Also on Friday, Britain's GlaxoSmithKline (London Stock Exchange: GSK-GB) said it had sold the remaining rights to its ofatumumab drug for up to $1 billion to Swiss pharmaceutical giant Novartis (Swiss Exchange: NOVN-CH). Shares in GSK were down around 3 percent while Novartis shares were 3.6 percent lower.

Companies in the auto and luxury sector have seen a fallout from concerns over the Chinese economy and the depreciation of the yuan (Exchange:CNY=). France's Peugeot Citroen (Euronext Paris: UG-FR) and Germany's Daimler (XETRA:DAI-DE) were both sharply lower.

On the other end of the scale, many of the miners were in positive territory as gold (Exchange:XAU=) gets a safe haven rebound during early trade, with stocks like Randgold Resources (London Stock Exchange: RRS-GB) and Anglo American (London Stock Exchange: AAL-GB) outperforming, down around 0.3 percent.

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