European stocks slip as earnings, China weakness weigh

Chinese shares closed 3% down, their biggest fall since Sept 15

European stocks fell on Wednesday, dragged lower by negative third quarter earnings reports and the biggest fall in Chinese stocks in over a month.

British publisher Pearson slumped 13% after warning about its earnings, and financials were hit as Swedish banks missed earnings expectations and Credit Suisse announced plans to raise 6 billion Swiss francs ($6.29 billion)capital after missing expectations also.

Chinese bourses gave up earlier gains to close down 3%, the biggest fall since September 15. Resources and energy stocks in Europe took their cue from China's weakness and were among the biggest losers in early trading.

In bonds, the cautious mood made for slightly lower yields, while commodities prices fell - copper futures were down 1% and crude oil futures were down more then 1%.

"This is a response to the late sell-off in China," said Craig Erlam, senior market analyst at Oanda in London.

"It was reminiscent of the kind of heavy selling that we saw back in August when emerging market concerns were very high, which in turn weighed on sentiment in Europe," he said.

In early trading the FTSEuroFirst index of leading 300 European shares was down two thirds of one% at 1,423 points. Pearson and Credit Suisse were the two biggest losers, down 14% and 4.5%, respectively.

Germany's DAX was down 0.2%, France's CAC 40 was down 0.5% and Britain's FTSE 100 was down 0.3%.

In Asia MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3%.

In Japan, the slowest growth in exports in over a year fuelled talk of recession but the prospect of more stimulus from the Bank of Japan lifted the Nikkei 225 by almost 2% to 18.554 points.

($1 = 0.9534 Swiss francs)