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* German DAX closes at lowest in almost 4 months
* SAP cutting its 2020 outlook, posts worst fall in 24 years
* SAP's pessimism dents hopes of global recovery - analyst
* Oil drop pressures energy stocks
(Updates to close)
By Sruthi Shankar and Susan Mathew
Oct 26 (Reuters) - German shares closed at their lowest in
nearly four months on Monday as Europe's most valuable tech
firm, SAP, experienced its worst trading day in 24
years after cutting its 2020 outlook.
The German DAX fell 3.7% as SAP slumped
almost 22% after abandoning medium-term profitability targets
and cautioning that its business would take longer than expected
to recover from the pandemic hit.
"SAP's pessimism does not bode well for hopes for the global
economic recovery to continue," said Edward Moya, senior market
analyst at OANDA, New York.
"If tech goes, the deteriorating outlook due to virus spread
will likely yield massive risk aversion as investors head for
the sidelines instead of rotating into cyclicals."
The wider European tech index slid 7.4%.
SAP's results came as a blip in the third-quarter earnings
season, which has been largely better than feared.
Meanwhile, fresh COVID-19-induced restrictions in Italy and
Spain to curb a resurgence in cases weighed on the rest of
Europe, with the pan-European STOXX 600 index closing
at a one-month low, down 1.8%.
Europe on Saturday became the second region after Latin
America to surpass 250,000 deaths, according to a Reuters tally.
The euro zone blue-chip index fell nearly 3%,
while Europe's travel and leisure sector, worst hit by the
movement curbs, was down 3.3%.
Nick Nelson, head of European equity strategy at UBS, said
the Swiss bank's target for STOXX 600 into the year-end is 340
points, about 4.5% below the current level, in part due to the
impact of the latest round of restrictions.
Surveys of euro zone purchasing managers last week showed
economic activity slipped back into decline in October,
heightening expectations for a double-dip recession as a second
wave of virus sweeps across the continent.
Globally, risk appetite was sapped by worries over slow
progress on a new U.S. stimulus bill and a looming presidential
election.
Milan's blue-chip index fell 1.8% even as ratings
agency Standard and Poor's upgraded Italy's sovereign outlook to
stable from negative.
Oil majors Total and Royal Dutch Shell
fell over 2.8% as crude prices slumped more than 3% on demand
worries.
Healthcare stocks remained supportive, with
AstraZeneca gaining 1.7% after it resumed the U.S. trial
of its experimental COVID-19 vaccine.
French stocks dipped 1.9%. Turkish leader Tayyip
Erdogan asked his compatriots to stop buying French goods on
Monday in the latest expression of anger in the Muslim world
over images being displayed in France of the Prophet Mohammad,
which some Muslims consider blasphemous.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj
Kalluvila and Emelia Sithole-Matarise)
Astrazeneca (AZN)
