By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets broke a four-day
winning streak on Wednesday, as U.S. lawmakers struggled to hammer
out an agreement to raise the debt ceiling before the country runs
out of borrowing authority on Thursday.
The Stoxx Europe 600 index lost 0.5% to 313.17, after closing at
the highest level in almost a month on Tuesday.
Shares of LVMH Moët Hennessy Louis Vuitton SA (LVMHF) slid 6.4%
after the luxury-goods firm late Tuesday said sales at its core
fashion and leather goods division fell in the third quarter.
Some peer firms tracked LVMH lower, with shares of Christian
Dior SA down 6.3% and Cie. Financière Richemont SA off 2.3%.
Shares of Peugeot SA dropped 6.2% after data showed new
passenger car registrations for the brand fell 2.9% in September,
compared with the same month last year. Overall, new car
registrations in the European Union rose 5.4%.
Danone SA slumped 4% after the company -- known for its Activia
yogurt and Evian water -- cut its full-year targets as it battles
to restore consumer confidence in its baby-milk products in Asia,
following the recent Fonterra food-safety scare.
More broadly, investors tracked developments in the U.S., where
the government shutdown moved into Day 16 and the deadline for
lifting the nation's borrowing limit moved closer. Treasury
Secretary Jack Lew has said the U.S. will run out of borrowing
authority on Oct. 17 unless Congress agrees on lifting the debt
ceiling. Senate leaders on Tuesday night restarted fiscal
negotiations after House Republicans' plans to vote on a proposal
they had put forward fell apart.
Fitch Ratings put its AAA credit rating of the U.S. on negative
watch late Tuesday, citing the prolonged congressional negotiations
over a hike to the borrowing limit.
"Although Fitch continues to believe that the debt ceiling will
be raised soon, the political brinkmanship and reduced financing
flexibility could increase the risk of a U.S. default," the ratings
company said.
U.S. stocks closed lower on Tuesday, but stock futures pointed
to a higher open on Wall Street on Wednesday. Asia markets closed
mixed.
Back in Europe, France's CAC 40 index dropped 0.8% to 4,220.26,
and Germany's DAX 30 index fell 0.2% to 8,790.69, retreating from
its all-time closing high reached on Tuesday.
The U.K.'s FTSE 100 index gave up 0.5% to 6,5316.10. Investors
in London digested the latest U.K. labor data, which showed the
unemployment rate in August held steady at 7.7%, although total
employment hit a record high.
Jobless claims fell in September, adding to signs the U.K. jobs
market is improving, but also fueling speculation that the Bank of
England's forecast for unemployment may be off. The central bank in
said in August it will keep interest rates at a record low until
the joblessness rate drops below 7%, which it judged unlikely to
happen before 2016.
"We expect unemployment to reach 7% by Q3 2015, sooner than
policy makers expect. Today's jobless claims data raise the risks
that unemployment could fall to the BOE's threshold sooner than we
expect, but recorded unemployment has not had a close relationship
with jobless claims recently," said Rob Wood, chief U.K. economist
at Berenberg, in a note.
Among notable movers in London, Burberry Group PLC gave up 1.5%,
building on a 7.6% loss from Tuesday, when the stock was hit by
news that Apple Inc. (AAPL) had named the luxury-goods firm's Chief
Executive Angela Ahrendts as senior vice president of retail and
online stores.
On a more upbeat note, shares of IMI PLC added 1.2% on news
Marmon Group LLC, the industrial arm of Warren Buffett's Berkshire
Hathaway Inc. (BRK/A), has bought the drinks dispensing and
merchandising divisions of the British engineering company.
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