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* STOXX 600 enters Oct with declines
* UK companies warn of staff crunch
* Tech, miners, banks among biggest fallers
(Adds comments, updates prices throughout)
By Sruthi Shankar and Shreyashi Sanyal
Oct 1 (Reuters) - European stocks slumped to their lowest in
two months on Friday, as warnings from companies and factory
activity data highlighted the economic headwinds from
supply-chain constraints and elevated prices.
The Europe-wide STOXX 600 index fell 0.4% in a weak
start to October, which has traditionally been a rough month for
equities, with technology, miners and banks
leading broad declines. The STOXX 600 ended the week
with declines of 2.2%.
Online electricals retailer AO World Plc tumbled
24.3%, saying a shortage of delivery drivers in Britain and
other disruptions in the global supply chain hit revenue growth
in the first half of the year.
Meanwhile, a survey showed euro zone manufacturing growth
remained strong in September but activity took a big hit from
supply chain bottlenecks that are likely to persist and keep
inflationary pressures high.
"Just because it appears the ECB will maintain its policy
for the foreseeable future, doesn't mean that higher inflation
should be ignored," said David Madden, market analyst at Equiti
Capital.
Underwhelming figures from Asian factories and overnight
losses on Wall Street dented the global mood as investors
awaited a report that is expected to show euro zone inflation
surged to a 13-year high.
With government bond yields surging to multi-month highs and
concerns about inflation coming to the fore, the benchmark STOXX
600 closed September 3.4% lower in its worst monthly showing in
almost a year.
"For equities, this combination of slowing growth – albeit
at a high level of demand – rising inflation and higher bond
yields has meant slightly higher volatility, lower market
returns and a rotation beneath the surface," Goldman Sachs
strategist Sharon Bell said in a note.
"It hasn't helped that earnings revisions have also started
to slow from their frenetic pace earlier in the year."
BofA Global Research cut its outlook for European stocks,
predicting a decline of nearly 10% by year-end given a shift in
the macro backdrop towards "anti-goldilocks", where slowing
growth is accompanied by higher discount rates.
BMW AG rose 1.3% after lifting its annual profit
margin forecast as higher prices for new and used vehicles
outweighed the effect of supply-chain issues.
French state-owned utility EDF and energy group
Engie rose 5.9% and 2.5%, respectively, with traders
pointing to relief that electricity tariffs were untouched by
the government in its plan to check further price rises.
France's biggest telecoms group Orange fell 0.8%
after it said it would buy insurer Groupama's 21.7% stake in
Orange Bank, its online banking unit.
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Saumyadeb Chakrabarty, Subhranshu Sahu and Louise
Heavens)