* Euro zone business growth halts, German activity shrinks
* Money markets raise bets of further stimulus
* Banks lead losses; trade worries push miners, autos lower
* Commerzbank slides after Moody's slams restructuring plan
* TUI, EasyJet jump after Thomas Cook collapse
(Adds comment, updates to close)
By Susan Mathew
Sept 23 (Reuters) - Euro zone stock markets clocked their
worst day in one month on Monday after dismal business activity
readings from across the currency bloc deepened fears of a
looming recession and suggested more stimulus was required.
After logging five straight weeks of gains, euro zone stocks
slipped 1% as surveys showed growth in services and
manufacturing in the region stalled in September. As a result,
bets on rate cuts accelerated in euro zone money markets.
Germany's DAX index fell 1% to post its biggest
one-day fall since Aug 23 as the latest purchasing managers
numbers showed its manufacturing sector sinking deeper into
recession.
"If nothing else, the readings... all but guarantee that
ECB stimulus efforts will expand and be sustained," said Ken
Odeluga, a market analyst at City Index. "How effective they may
be is another question entirely."
European Central Bank chief Mario Draghi said the data
justified the bank's indefinite stimulus promised earlier this
month and reiterated his call on governments to step up their
efforts as monetary policy can only prop up domestic confidence.
Banks were the worst hit, with the eurozone banking index
slumping 2.8. This included a 7.5% slump in Commerzbank
after Moody's said the German bank's restructuring
plan is negative for its credit rating.
The broader pan-European index that includes stocks
outside the euro zone slipped 0.8%, breaking three sessions of
gains.
Persistent concerns over U.S.-China trade tensions were also
a reason for investors to jettison stocks and move to the safety
of bonds. Market participants are still unconvinced that a trade
deal between the two countries is likely anytime soon.
U.S. and Chinese officials described the deputy-level trade
talks last week as being "constructive" and "productive", but
this came after a Chinese agriculture delegation canceled a
visit to U.S. farms in Montana on Friday.
"What we'd like to see is concrete progress and that is the
thing we're lacking," said IG Markets analyst Chris Beauchamp.
Trade-reliant sectors such as mining, auto and parts
and technology were among the biggest decliners,
losing at least 1.7% each.
Shares of TUI jumped 7.2 to top the STOXX 600 and
EasyJet followed on expectations their businesses will
benefit from the collapse of British rival Thomas Cook.
These moves, along with a drop in the pound, helped
limit losses on London's FTSE 100 to 0.3%.
(Reporting by Shreyashi Sanyal, Sruthi Shankar and Susan Mathew
in Bengaluru; Editing by Patrick Graham and Dan Grebler)
