British shares closed lower for the first day in September on weak volumes due to US markets being closed for Labor Day. A downgrade for Hurricane Gustav pressured commodities prices and energy stocks tracked weaker crude.
The FTSE 100 was down 33.80 points, or 0.60 per cent at 5602.80.
Oil giants BP and Royal Dutch Shell lost between 1 per cent and 2 per cent. While Cairn Energy and Tullow Oil were down 5.6 per cent and 4.2 per cent respectively.
NYMEX light crude for October delivery fell over US$4.24 to US$111.22.
Miners were also lower, with Kazakhmys shares off 5.8 per cent and BHP Billiton was down 4.1 per cent as copper and platinum futures fell in electronic trading.
Rio Tinto was 4.2 per cent lower even though Chinese aluminium maker Chinalco said it may lift its minority stake in the group if market conditions were right, but it had no timetable for such a move.
COMEX gold for December delivery fell US$11.70 to US$823.50 or almost 4 per cent.
In other news, Enterprise Inns slipped 2.5 per cent after recent negative broker comment and ahead of earnings news in the UK pubs sector this week.
London Stock Exchange shed 2.6 per cent on news the bourse would introduce deep fee cuts and incentives for traders on Monday.
RSA Insurance rose 4.3 per cent as traders cited persistent market talk of bid interest from Zurich Financial Services.
Also on the plus side, British Airways jumped 4.3 per cent on the back of the retreat in crude prices. Tour operator TUI Travel also made gains of 2.6 per cent, and buses firm FirstGroup was up 2.6 per cent.
US dollar earners also featured among the FTSE 100 gainers as the currency moved higher again after a recent lull. Wolseley put on 3.5 per cent, British American Tobacco added 2.2 per cent Rolls-Royce gained 2 per cent and Unilever firmed 1.4 per cent.
European markets
High profile Commerzbank led European markets lower on Monday after it agreed to purchase Allianz's Dresdner Bank. Miners also dragged, reflecting a sharp decline in metal prices.
Germany’s DAX slipped 0.50, or 0.01 per cent to 6421.80, while France’s CAC 40 dropped 10.47, or 0.23 per cent to 4472.13.
Banks stocks lost ground after Commerzbank's acquisition of Dresdner was touted as overpriced. Commerzbank shares slid 10 per cent, while Allianz closed nearly flat.
Commerzbank said that it will pay 8.8 billion euros to buy Dresdner Bank from insurer Allianz. The deal price could be an extra 975 million euros depending on the performance of asset-backed securities that Dresdner holds.
Other banks also weakened, with UBS losing 1 per cent, Deutsche Bank dropping 0.2 per cent and Postbank falling 0.7 per cent.
Falling metal prices sent France’s Eramet down 6.9 per cent. Meanwhile, Swedish steel producer SSAB lost 2.2 per cent and Norwegian aluminium maker Norsk-Hydro lost 3.8 per cent.
France’s ArcelorMittal fell 1.9 per cent, but Credit Suisse said the stock would likely perform well ahead of its investor day later this month.
Oil companies also retreated, with Norway’s StatoilHydro down 4.3 per cent, France’s Total 2.7 per cent lower and Italy’s Eni lost 1.4 per cent.
The easing oil price gave airline stocks a boost. Air France-KLM rose 3.3 per cent and Deutsche Lufthansa added 2.1 per cent.
French tyre maker Michelin was also on the upside, rising 5.4 per cent as traders cited a Merrill Lynch upgrade.
Japanese markets
Japanese stocks fell on Monday as exporters suffered on a stronger currency and broader economic worries. Concerns over lower worldwide tech spending prompted a sell-off in technology stocks, dragging the market lower.
The benchmark Nikkei 225 lost 238.69 points or 1.83 per cent to 12834.18.
Export-oriented carmakers were the biggest drag on the market with Honda losing 3.4 per cent and Toyota slipping 2.2 per cent.
Tech stocks also lost ground with Kyocera falling 2.6 per cent and Tokyo Electron ending 3.4 per cent lower.
Bucking the trend was Nintendo, which added 3.7 per cent. The electronic games company has risen around 12 per cent since it lifted its profit outlook on Friday.
Mitsubishi UFJ Financial fell 1.8 per cent, Mizuho lost 1.9 per cent, and Sumitomo Mitsui was down 2.4 per cent.
Hong Kong markets
Hong Kong shares lost ground on Monday amid concerns of a broader economic slowdown. Tech stocks echoed the fall across Asian markets and coal companies also dragged on the market.
The benchmark Hang Seng Index closed 355.58 points or 1.67 per cent lower at 20906.31.
Computer maker Lenovo Group fell 6.4 per cent after Dell warned that companies worldwide were cutting technology spending.
LG Electronics also slid 9.6 per cent, while Foxconn International Holdings finished 4.6 per cent in the red.
Wireless carrier China Mobile shed 2.3 per cent.
Chinese coal miners moved lower on fears of stricter government-imposed price caps on thermal coal. China Shenhua fell 2.4 per cent after Credit Suisse cut its target price on the stock, and Yanzhou Coal lost 5 per cent.
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