Dax leads European share sell-off after yuan devaluation | Business| Economy and finance news from a German perspective | DW | 12.08.2015
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Dax leads European share sell-off after yuan devaluation

European shares fell sharply on Wednesday, with German stocks being among the main losers. Investors are worried about the impact of the lower yuan on German exporters after Beijing devalued the currency.

Germany's blue-chip index DAX finished 3.27 percent down at 10,942.61 points.

It has now shed about 6 percent since Tuesday, when China devalued the currency by 1.9 percent, followed by a second devaluation of 1.6 percent on Wednesday. It led the renminbi, as the currency is officially known, to drop to its lowest level against the greenback for 10 years.

Britain's FTSE100 index ended the session 1.4 percent lower, while the CAC 40 in Paris dropped 3.4 percent on Wednesday.

Pan-European indices reflecting the auto and luxury goods sectors were badly hit, as companies fear their products will be less competitive in China. Demand for those products is likely to be affected, as the economic downturn in China leads to reduced demand for nonessential items.

Carmaker BMW fell 3.7 percent at one point, while luxury goods group LVMH slumped nearly 4 percent.

Asian indices also fell earlier on Wednesday, with Hong Kong's Hang Seng down 2.38 percent. Shanghai dropped 1.06 percent; Tokyo's Nikkei shed 1.58 percent.

Meanwhile, the euro jumped against the US dollar, as many dealers believe that the yuan's devaluation could mean that the US Federal Reserve will hold fire on a much anticipated US interest rates hike next month.

The yuan's devaluation has sparked fears of a currency war, but China insists it is not planning a "sustained depreciation" of the currency. But Deutsche Bank analysts have warned of volatile times ahead, saying in a research note that the "China devaluation is a recipe for higher volatility across all asset classes."

ng/uhe (Reuters, dpa)

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