A trader sits in front of a board displaying the stock trading chart at the Frankfurt Stock Exchange. The DAX 30 index sank 3.80% to 9,570.66 points yesterday.

AFP
London

European stock markets tumbled yesterday with carmakers and miners in freefall on the worsening Volkswagen scandal and a bleak outlook for China’s economy, dealers said.
Frankfurt’s benchmark DAX 30 index sank 3.80% to 9,570.66 points, with carmaker Volkswagen collapsing by a nearly fifth after revealing as many as 11mn diesel cars had been equipped with devices that could skew emissions data.
The Paris CAC 40 shed 3.42% to 4,428.51 points and London’s FTSE 100 fell 2.83% to 5,935.84 points, with miners suffering sharp falls after the Asian Development Bank (ADB) slashed its growth forecasts for China.
“If a growth downgrade from the Asia Development Bank weren’t bad enough for global stock markets, knocking the mining sector sharply lower on prolonged global growth fears in Asia, the auto sector has skidded into full reverse as Volkswagen’s woes continue,” Michael Hewson, analyst at traders CMC Markets analyst, told AFP.
VW issued a profits warning as concerns mounted “that the probe into VW’s emissions deception might uncover much wider malpractice in the sector,” said Hewson.
Reports said VW chief executive Martin Winterkorn could be forced out later this week by the company’s supervisory board and the US has opened a criminal probe.
VW shares plunged 19.82% to 106 euros as the group also set aside €6.5bn ($7.3bn) in provisions in the third quarter to cover potential costs arising from the scandal.
The troubled company—whose stock had plunged 35% in two days and wiping out €25bn in market capitalisation—warned it would have to adjust its annual profit targets accordingly.
The enormity of Volkswagen’s problems became more clear as it acknowledged 11mn diesel vehicles may have the pollution cheating device, much more than the half million for which US authorities could fine the carmaker up to $18bn.
The fast-moving scandal sent rival European carmakers plunging on growing worries over the sector.
German carmakers BMW and Daimler sank by 6.02% and 7.02% to stand at €79.32 and €66.25, respectively.
In Paris, French peers Peugeot shed 8.76% to €13.86 and Renault 7.12% to €66.55.
Shares in Fiat Chrysler fell 6.21% to €11.93 on the Milan exchange, which fell 3.33% overall.
“It’s an auto sector shaking incident that is the main contributor to the bearish trading—and something that looks like it could rumble on for some time,” said Connor Campbell,
analyst at dealers Spreadex.
Mining companies were also among the heaviest fallers after the ADB forecast Asian growth would hit 5.8% this year and 6.0% in 2016. March’s forecast was for 6.3% for both years.
It tipped China—the main driver of global economic growth—to expand by 6.8% this year. That was downgraded from 7.2% after a stream of weak indicators including on trade, inflation, investment and consumer spending.
The news weighed heavily on mining and metal groups around Europe because China is a major consumer of commodities such as copper and gold.
In London, mining giant Glencore saw its share price nosedive 10.63% to 106.35 pence, topping the FTSE 100 fallers’ board.
Anglo American dropped 6.73% to 648.10 pence and Antofagasta shed 7.25% to 524.50 pence.
In Amsterdam, shares in ArcelorMittal—the world’s biggest steelmaker—lost a hefty 5.92% to 5.46 euros.
Steel group Thyssenkrupp shed 4.8% to 16.26 euros in Frankfurt.
In foreign exchange activity yesterday, the European single currency slid to $1.135 from $1.1195 late in New York on Monday, as the dollar received support by US officials talking up chances of an interest rate hike later this year.
The US stocks followed Europe’s lead, with the Dow Jones Industrial Average sliding 1.64% to stand at 16,240.1 points in midday trading.