European stocks sank yesterday in huge trading volumes, extending their week-long sell-off and with a benchmark index hitting its lowest level since mid-August as concerns about global economic growth spooked investors.

The FTSEurofirst 300 index of top European shares ended 0.8 per cent lower at 1,319.12 points. The benchmark has lost 6.5 per cent over the past three weeks.

Europe’s renewed sell-off mirrored overnight losses in Asian and US equities after the International Monetary Fund cut global growth forecasts.

In the latest evidence of economic malaise, China’s services sector growth weakened in September as new business cooled, another sign the world’s second-largest economy may be slowing. The figures came a day after German industrial output fell much further than forecast.

“Many US funds are selling their European equity positions and bringing back the money to the United States because of fears over the European economy,” a Paris-based trader said.

Around Europe, Britain’s FTSE 100 index fell 0.2 per cent while both Germany’s DAX index and France’s CAC 40 lost one per cent.

The eurozone’s blue-chip Euro STOXX 50 index fell 0.9 per cent to 3,053.31 points, with the index’s technical chart showing a bearish ‘death cross’ signal.

Shares in German business software maker SAP featured among the top losers, down 3.9 per cent. Traders cited speculation about weak orders in the fourth quarter and an internal memo in which the company’s finance chief urged staff to cuts costs.

Jitters over the spread of Ebola also hurt sentiment, with shares in airlines and travel companies losing ground. TUI lost 3.6 per cent, Thomas Cook dropped 2.4 per cent and IAG fell 0.7 per cent.

Air France-KLM, which yesterday, said the total cost of last month’s two-week-long strike by pilots was €500 million, shed 2.5 per cent.

Despite the sharp retreat, Joerg De Vries Hippen, co-chief investment officer for European equities at Allianz Global Investors, which manages €373 billion of assets, said he saw good value in European stocks.

“European stocks are the cheapest you can find, and the only investment where you can realistically expect returns of five percent per year given the good dividend yields,” he said.

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