European Markets Sank On Concerns Over China & North Korea

(RTTNews) - The European markets ended Wednesday's session firmly in negative territory. Mining and resource stocks were under heavy pressure due to concerns over the health of the Chinese economy. Energy stocks were also weak after Saudi Arabia slashed prices for European customers in a bid to hurt Iran. The Saudis are desperate to retain market share as Iranian oil comes online following years of heavy sanctions.

China's central bank set the central parity rate for yuan at 6.5314 per dollar, compared to Tuesday's reference rate of 6.5169. The announcement drove the yuan to a five-year low against the dollar.

The services sector in China remained in expansion in December, albeit at a slower pace, the latest survey from Caixin showed on Wednesday with a 17-month low PMI score of 50.2. That's down from 51.2 in November, although it remains barely above the boom-or-bust line of 50 that separates expansion from contraction.

North Korea claims that it has successfully tested its first hydrogen bomb, a more powerful type of nuclear weapon than the North has previously tested. The claim is currently under investigation and may take weeks to verify. The global community reacted strongly against what is seen as a severe threat to the prospects of global peace.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.22 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.37 percent.

The DAX of Germany dropped 0.93 percent and the CAC 40 of France fell 1.26 percent. The FTSE of the U.K. declined 1.04 percent and the SMI of Switzerland finished lower by 1.01 percent.

Chipmakers were under pressure after the Nikkei business daily reported that Apple Inc. is expected to cut output of its latest iPhone 6 and 6s plus models by about 30 percent in the first quarter of this year.

In Frankfurt, Infineon Technologies and Dialog Semiconductor declined 3.09 percent and 5.61 percent, amid worries concerning supplies to Apple.

BMW dropped 3.38 percent and Daimler fell 2.72 percent. Volkswagen decreased 1.81 percent and Continental lost 3.21 percent.

ThyssenKrupp weakened by 2.14 percent and Salzgitter surrendered 2 percent.

In Paris, advertising firm Publicis Groupe retreated 4.35 percent and peer JCDecaux tumbled 4.98 percent, amid broker downgrades.

Peugeot dropped 5.25 percent and Renault fell 2.27 percent. Car parts maker Valeo also declined 3.32 percent.

Technip sank 3.78 percent and Total finished lower by 0.96 percent.

In London, chipmaker ARM Holdings lost 2.99 percent.

Kingfisher climbed 3.14 percent, after Jefferies upgraded its rating on the stock to "Buy" from "Hold."

Mining stocks were under pressure due to concerns over China's economy. BHP Billiton sank 4.91 percent and Rio Tinto tumbled 4.80 percent. Anglo American dropped 4.52 percent and Glencore fell 2.73 percent.

BG Group decreased 2.22 percent and BP lost 1.35 percent. Royal Dutch Shell weakened by 1.87 percent and Tullow Oil sank 7.12 percent.

ASML declined 2.33 percent in Amsterdam, amid the rout in chipmakers.

Eurozone producer prices decreased at a stable pace for the second straight month in November, in line with expectations, Eurostat reported Wednesday. The producer price index fell 3.2 percent year-over-year in November, the same rate of decrease as in the previous month, which was revised from a 3.1 percent drop reported earlier. The figure was also matched with consensus estimate.

Eurozone private sector activity expanded at a faster than initially estimated pace in December, final data from Markit showed Wednesday. The composite output index rose to 54.3 in December from 54.2 in November. It was above the flash score of 54.

Germany's private sector expanded at the fastest pace in 17 months in December, final data from Markit showed Wednesday. The composite output index rose to 55.5 in December from 55.2 in November. The flash score was 54.9.

French service providers reported a reduction in activity for the first time in almost a year in December, final data from Markit showed Wednesday. The services Purchasing Managers' Index fell to 49.8 from 51 in November. The flash score was 50.

French consumer confidence remained unchanged in December, survey results from the statistical office Insee showed Wednesday. The consumer sentiment index came in at 96 in December, the same reading as seen in November. It was forecast to drop to 95.

Although the British service sector expanded at a solid pace in December, underpinned by a sharp rise in new business, the pace of growth eased slightly from November as expectations fell to a near three-year low.

The Purchasing Managers' Index dropped slightly to 55.5 from 55.9 in November, survey data from Markit and the Chartered Institute of Procurement & Supply revealed Wednesday. The reading was forecast to drop to 55.6. Shop prices in the United Kingdom continued to decline in December, the British Retail Consortium said on Wednesday, falling 2.0 percent on year. That follows the 2.1 percent decline in November.

Private sector employment in the U.S. increased by much more than expected in the month of December, according to a report released by payroll processor ADP on Wednesday. ADP said private sector employment jumped by 257,000 jobs in December after climbing by a revised 211,000 jobs in November.

Economists had expected employment to increase by about 190,000 jobs compared to the addition of 217,000 jobs originally reported for the previous month.

Partly reflecting a notable decrease in the value of imports, the Commerce Department released a report on Wednesday showing that the U.S. trade deficit narrowed in the month of November. The Commerce Department said the trade deficit shrank to $42.4 billion in November from a revised $44.6 billion in October.

Economists had expected the deficit to widen to $44.4 billion in November from the $43.9 billion originally reported for the previous month.

Citing faster deliveries, the Institute for Supply Management released a report on Wednesday showing an unexpected slowdown in the pace of growth in U.S. service sector activity in the month of December. The ISM said its non-manufacturing index edged down to 55.3 in December from 55.9 in November, although a reading above 50 continues to point to growth in the service sector.

The modest decrease came as a surprise to economists, who had expected the non-manufacturing index to inch up to 56.2.

After reporting a notable increase in new orders for U.S. manufactured goods in the previous month, the Commerce Department released a report on Wednesday showing a modest pullback in orders in November.

The report said factory orders edged down by 0.2 percent in November after jumping by 1.3 percent in October. The modest decrease matched economist estimates.