European stocks were in the red on Monday after rare protests in China against the country strict anti-Covid measures sparked worries among investors over growth prospects for the world’s second-largest economy.
Despite attempts to shut down coverage by China’s dictatorship, hundreds of demonstrators and police clashed in Shanghai on Sunday night as the third day of protests spread to several cities.
The pan-European Stoxx 600 index was down 0.82% at 1240 GMT, with all major regional bourses lower. Asia shares were also down as the unrest spread, while oil prices hit their lowest levels since January over concerns that Chinese demand could weaken.
“Rare protests have broken out across major Chinese cities in a backlash against the ongoing draconian zero-tolerance to covid approach from the authorities that has inhibited the freedoms of Chinese citizens since the start of 2020 and has sharply damaged China’s economy,” said Interactive Investor analyst Victoria Scholar.
“As a result, international investors have become a lot more cautious towards China with the unrest weighing on the Shanghai Composite, the Hang Seng Index and the Chinese yuan in today’s trade.”
“While most other nations have reopened their economies with life returning to normal, China is left facing heavy handed restrictions prompting unrest across the country. The expectation is that Beijing will continue with its tough measures until March or April resulting in more lockdowns and more pressure on growth.”
In equity news, Brenntag shares fell more than 8% after the German chemicals distributor confirmed that it had held preliminary takeover talks with US rival Univar Solutions.
Telecom Italia shares were down ahead of a potential decision on a takeover bid from Italian state lender CDP.
Reporting by Frank Prenesti for Sharecast.com
