Europe stocks under pressure from Hong Kong, ECB worries

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LONDON (MarketWatch) - European stocks dropped Monday as investors fretted about taking on risk amid contentious pro-democracy protests in Hong Kong against Beijing. Additional downbeat data for the eurozone ahead of the European Central Bank's meeting this week also weighed on investor sentiment.

In the U.K., the FTSE 100 was 0.5% lower, with mining stocks down as the protests in Hong Kong added to ongoing concerns about economic growth in China, a key market for natural-resource producers. Overnight, Hong Kong stocks fell 1.9%.

Data: The European Commission's measure of business and consumer confidence in September fell to its lowest level since late last year, with the Economic Sentiment Indicator hitting 99.9 from 100.6 in August. Economists were looking for a decline to 100.0.

The data added to a string of recent reports showing growth in the region has slowed, including last week's Ifo business-climate index from Germany - Europe's largest economy - that fell to a 17-month low this month.

German inflation, meanwhile, held steady at the low level of 0.8% in September, according to government statistics released Monday.

Markets: The Stoxx Europe 600 fell 0.8% to 339.65, with all the major sectors moving lower. Germany's DAX 30 fell 0.9% and France's CAC 40 was off 0.5%.

'We have seen a number of measures thrown at the eurozone's ultra low inflation and low growth issues but so far nothing has worked,' said James Hughes, chief market analyst at Alpari, in a note early Monday. The ECB will meet Thursday, with most analysts saying the bank is likely to talk more about its 'private' quantitative easing program rather than launching a larger effort.

'It could well be that the last option [ECB President] Mario Draghi has is full blown QE starting potentially the month the U.S. finally finished their plan,' said Hughes.

Ahead of the open of trading in the U.S., Chicago Federal Reserve President Charles Evans said on CNBC the Fed will likely need to keep interest rates low beyond next summer, until it appears the U.S. economy can handle the shift. 'I think there will be quite some time before it becomes appropriate to raise rates,' he said.

Among stock movers, Balfour Beatty PLC dropped the most on the Stoxx 600. Shares sank 18% after the engineering and construction warned that profit in its U.K. construction services unit will be around 75 million pounds ($122 million) lower than previously expected.

In the bond market, the yield on the 10-year Greek government bond reached its highest level sine Aug. 6, according to electronic trading platform Tradeweb. Bond yields climbed last week after Greek Prime Minister Antonis Samaras said the country plans on exiting its bailout program earlier than anticipated.

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