European shares fell sharply on Tuesday, with a further slide in crude oil prices hitting energy stocks and British grocer Tesco plunging after another profit warning.
Tesco shares fell 15 per cent after it slashed its full-year outlook by almost a third in the latest downgrade sparked by an accounting scandal and intense competition in its home market.
The FTSEurofirst 300 index of top European shares was down 1.1 per cent at 1,381.16 points by 0809 GMT after falling 0.7 per cent in the previous session.
The STOXX Europe 600 Oil and Gas index fell 2.4 percent, the biggest sectoral decliner, after Brent oil slipped to a five-year low below $66 a barrel following a drop of more than 4 percent the day before on worries of a swelling supply glut.
BP, Tullow Oil, Statoil and Respsol fell 2 to 3.2 per cent.
European shares extended their previous session’s losses on Tuesday, mirroring weaker equities in the United States and Asia, with a further drop in oil prices to a five-year low seen hurting energy stocks.
Brent slipped below $66 a barrel after plunging more than 4 per cent the day before on worries of a swelling supply glut.
Oil is likely to remain around $65 for the next six or seven months, the chief of Kuwait’s national oil company had said on Monday, in the latest sign Gulf producers are ready to ride out plunging prices.
“Although lower oil prices should be a positive cue for pretty much every other sector other than energy, it’s the persistent weakness amongst the energy shares that’s overshadowing any benefits and dragging down the major indices,’’ Jonathan Sudaria, a dealer at Capital Spreads, said in a note.
Mining stocks will also be in focus after the prices of key industrial metals fell. Shanghai aluminium plumbed its lowest level since May on Tuesday as growing overcapacity and the shaky outlook for demand in China curbed buying, while copper prices on the London Metal Exchange slipped 0.4 per cent.
The S&P 500 posted its biggest daily percentage drop since October 22 on Monday on weaker energy prices, while Japan’s Nikkei share average fell on Tuesday, snapping a seven-day winning streak, as a rebound in the yen prompted investors to book recent gains in exporter shares.