European stocks dropped Tuesday, with investors assessing China’s unexpected devaluation of the yuan, but Greek shares outperformed after the cash-strapped country reached terms on reforms needed to unlock fresh financial aid.
The Stoxx Europe 600 SXXP, -0.41% shed 0.6% to 397.63. All sectors logged losses, led by drops in the basic-resources and consumer-goods groups.
Yuan impact: Overnight, China’s central bank lowered the value of the country’s currency by changing the way in which it calculates the yuan’s daily midpoint against the U.S. dollar. Tuesday’s move resulted in the yuan USDCNY, +1.8533% weakening by 1.9% at 6.2298, a move cheered by some Chinese exporters. The devaluation comes after trade data at the weekend showed Chinese exports sank 8.3% in July. Read: Yuan suffers biggest one-day loss in two decades.
“China’s move is a big negative for the currencies of countries that sell to China and those that compete with it in third countries,” said Marshall Gittler, head of global FX strategy at IronFX Global, in a note.
“The weaker CNY may make life more difficult for the eurozone as well,” he added. “It also helps China to export deflation around the world.”
German car makers: Stocks in export-oriented Germany fell, pushing the Germany’s DAX 30 DAX, -0.51% down 0.6% to 11,534.06. Auto makers were under pressure. BMW AG BMW, -2.85% fell 2.6%, Daimler AG DAI, -2.44% gave up 1.9%, and Volkswagen AG VOW3, -2.20% lost 1.4%.
Other benchmarks: The U.K.’s FTSE 100 UKX, -0.35% fell 0.7% to 6,689.25, with miners among those pushed lower. BHP Billiton PLC BLT, -1.12% BHP, +2.80% BHP, +1.31% shares fell 1.8%.
France’s CAC 40 PX1, -0.58% gave up 0.7% at 5,161.05.
In the currency market, the euro EURUSD, +0.2178% fell to $1.0982, from $1.1019 late Monday in New York.
Greece: The Athex Composite GD, +1.44% rose 1.3% after a Greek government official said the country and its creditors have reached an agreement on the measures needed to secure a third bailout for the country. Athens has confirmed an agreement has been struck, media outlets reported. Shares of National Bank of Greece ETE, +6.12% were among the advancers, rising 6.9%.
Greece needs more funding before Aug. 20, when €3.2 billion of Greek government bonds owned by the ECB.
Source: MarketWatch
