Europe Shares Close Lower; Deutsche Bank Drops

European equities closed lower on Monday after data showed that growth in China was continuing to slow, and a surprise profit warning from Deutsche Bank worried investors.

The pan-European FTSEurofirst 300 provisionally closed lower by 0.1 percent at 1,343.47 points, with banks down around 1.2 percent after Deutsche Bank’s profit warning.

Shares of the bank closed lower by roughly 5.5 percent after it reported a pre-tax loss of 1.153 billion euros ($1.56 billion) for the fourth quarter of 2013, due to heavy litigation costs, restructuring and balance sheet reduction.

“2014 will be very difficult and will be very similar to 2013 [for the bank],” Dirk Becker, deputy head of German research at broker Kepler Cheuvreux, told CNBC on Monday.

He added: “They [Deutsche Bank] always said there would be more litigation and restructuring costs…All these burdens had been broadly expected by the market and it’s probably better to put them in the 2013 results.”

Equities also responded to the latest data from the world’s second-largest economy, China. The Chinese economy grew 7.7 percent in the final three months of 2013, above expectations for a 7.6 percent gain, but down from the previous quarter’s 7.8 percent reading. Thus, China’s gross domestic product (GDP) growth fell to its slowest pace in 14 years.

“For markets, the slowdown is somewhat expected, as China transitions itself from an economy driven by consumer spending and services rather than one reliant on debt-fueled investments and exports,” wrote Ishaq Siddiqi, a market strategist at ETX Capital.

“Markets are expecting GDP for the country to come in between 7.2 percent to 7.4 percent for 2014, but are hopeful that economic reforms put in place by the current leadership will bear fruit by 2015 and beyond.”

In Asia, the Shanghai Composite dropped below the 2,000 mark for the first time in six months on Monday. In Japan, shares of Nintendo fell 10 percent after it warned on Friday that it could post its third consecutive annual loss.

Meanwhile in the U.K., the Serious Fraud Office has received additional funding to continue its probe of alleged bribery and corruption by Rolls-Royce in China and Indonesia, sources told the Financial Times on Monday.

Peugeot Citroen shares closed down roughly 11 percent on the back of annual sales, which were down 4.9 percent, and reports on its 3 billion euros capital increase. Peugeot’s global deliveries fell to 2.82 million vehicles last year from 2.97 million in 2012.

Mothercare shares provisionally closed higher 6.25 percent after the Sunday Times reported that Tesco was considering a bid for the mother and baby products retailer.

U.S. markets were closed due to Martin Luther King Day.

Source: CNBC