Europe open: Shares lower on fading US stimulus hopes

(Sharecast News) - European shares started Thursday's session in the red after a sharp fall on Wall Street overnight on fading US stimulus hopes as investors waited on new fiscal measures from the UK government.
The pan-European Stoxx 600 index was down 1.2% at the open with all major European markets lower. Fears in the UK that tougher coronavirus restrictions were almost inevitable led London's FTSE 100 1.2% lower. Investors were also awaiting details of a new jobs support package from Finance Minister Rishi Sunak.

In the eurozone, France's CAC was down by almost 1%, with Germany's DAX down 0.7% after PMI readings on Wednesday showed the services sector in both countries has started to contract once again in September.

The European sell off was driven by worries that the US Congress would not agree extra fiscal stimulus to counter the ongoing Covid-19 crisis, meaning there may be no further support until 2021.

In London, Sunak on Wednesday cancelled the Budget scheduled for next month and was set to announce a new support package later on Thursday to replace the furlough scheme that finishes at the end of October.

Speculation centred on wage subsidies and targeted aid for exposed sectors, such as leisure and hospitality, which have been hit by fresh curbs on trading hours.

In equity markets, engine maker Rolls-Royce and GKN owner Melrose Industries were under the cosh again amid concerns about the impact of Covid-19 on the airline industry.

British Airways and Iberia owner IAG, Airbus, InterContinental Hotels and easyJet were also trading lower.

Elsewhere, Smiths Group was in the red after it posted a drop in annual profit but reinstated its dividend and said business was stabilising.

Cineworld sank after saying it swung to a loss in the first half after its cinemas were forced to close in March due to the pandemic and warned it would need to raise additional liquidity if its cinemas were shut again.