- IMF lowers outlook for world growth
- US tackles debt ceiling
- German economic data
- Clegg addresses UK/EU relations
FTSE 100: -1.11%
CAC 40: -0.77%
FTSE MIB: -0.29%
IBEX 35: -0.67%
Stoxx 600: -0.76%
European equities slid as the International Monetary Fund (IMF) lowered its outlook for growth and concerns over the US debt ceiling mounted.
The IMF cut its world growth forecast for this year by 0.3 percentage point to 2.9% and next year by 0.2 percentage point to 3.6%, compared to its assessment in July.
In its latest World Economic Outlook the IMF said international recovery rests on the US and China - the globe's two biggest economies.
The US Federal Reserve's stimulus measures and China's efforts to turnaround from a recent slowdown will be the key drivers in the near term, the IMF said.
In the US, the government is currently wrangling over the federal budget and the impending debt ceiling.
If it fails to raise the $16.7trn borrowing limit by October 17th, the Treasury will run out of cash to pay its bills that could lead the US to default on its debt.
Majority Leader, Harry Reid, was expected to unveil a measure to raise the debt ceiling as early as Tuesday, setting the table for a vote later in the week.
The measure is anticipated to provide enough borrowing room to last beyond the 2014 election.
"Although most investors believe that a deal will be reached by the October 17th deadline, investors are still concerned with the impact their portfolios are likely to take in the meantime," said Shavaz Dhalla, Financial Trader at Spreadex.
German factory orders fall unexpectedly
German factory orders declined in August by 0.3% from July when they dropped a revised 1.9%, the Economy Ministry said. Economists had pencilled in a 1.1% increase.
The report supported the European Central Bank's view that economic recovery in the euro area is fragile.
Separate data from the Federal Statistics Office showed German exports rose slightly in August to widen the trade surplus. Seasonally-adjusted exports gained 1% on the month, while imports were up 0.4%.
The data comes amid political uncertainty in Germany over which party Chancellor Angela Merkel's Christian Democrats will form a coalition with in order to end a hung parliament following the September 22nd federal election.
Opposition party Social Democrats have signalled their readiness to join the conservative Christian Democrats while a top aide for Merkel has suggested a partnership with the Greens was a realistic possibility.
Clegg slams Cameron's EU/UK plans
Liberal Democrat leader Nick Clegg has accused Prime Minister David Cameron of "playing with fire" over his plans to reform Britain's relations with the European Union (EU).
The Deputy Prime Minister said it would be "economic suicide" for Britain to leave the EU and slammed Cameron's proposed referendum as a "short sighted political calculation".
In January Cameron vowed to negotiate a new EU deal for Britain and hold an "in-out" referendum on EU membership by the end of 2017.
Getinge, Telecom Italia
Getinge slumped after the maker of sterilisation systems said it expects a consolidated profit before tax of 560m kronor to 570m kronor for the third quarter, missing analysts' forecasts.
Telecom Italia declined after Standard & Poor's said it was likely to reduce its BBB-long-term rating, the lowest investment grade, to BB+ after concluding a review of the phone company by the end of next month.
Alcatel-Lucent gained following reports the company plans to cut 10,000 jobs.
TGS Nopec Geophysical dropped after saying sales for the full year will be between $810m and $870m, down from a previous forecast for a range between $920m and $1bn.
Novartis slid after JPMorgan Chase reduced its rating on the drugmaker to 'neutral' from 'overweight'.
Celesio rallied on a report that McKesson Corp. may buy the German drug distributor.
Ocado Group jumped afer Goldman Sachs recommended that investors 'buy' the stock due to expected growth from its partnership with Morrison Supermarkets.
UK house builders Barratt Developments and Taylor Wimpey advanced after the house-price gauge from the Royal Institution of Chartered Surveyors rose in September to 54, the highest since June 2002, from 41 in August.
Other asset classes climb
The euro rose 0.02% to the 1.3584 US dollar.
Brent crude futures edged up $0.580 to $110.320.