UPDATE 2-European shares routed as recession worries heighten

Reuters

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      CS shares hit record low on news of cash call
    

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      Euro zone likely entering recession - flash PMI
    

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      German shares hit Nov 2020 lows 
    

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      STOXX 600 loses 4.4% on the week 
    

  
 (Updates to market close)
    By Susan Mathew, Shreyashi Sanyal and Johann M  Cherian
       Sept 23 (Reuters) - European energy and material stocks
sank nearly 6% on Friday, pushing a broader index of regional
shares to near two-year lows as dismal euro zone data pointed to
an economic downturn, adding to worries over hawkish central
bank moves.
    UK stocks  .FTSE  lost 2%, with further losses capped by a
3% plunge in the pound  GBP=  after British finance minister
Kwasi Kwarteng announced a series of tax cuts and measures aimed
at boosting growth.  GBP/  .L 
    The pan-European STOXX 600 index  .STOXX  dropped 2.3%,
taking weekly losses to 4.4% - its worst week since mid-June. 
    A survey showed the downturn in business activity across the
euro zone deepened this month, likely entering a recession as
consumers rein in spending amid a cost of living crisis.
 urn:newsml:reuters.com:*:nL1N30U0E5
    Europe's biggest economy, Germany, saw its main index
 .GDAXI  hit its lowest since November 2020, down 2.0%. 
    "Given the downward risks and the high degree of
uncertainty, everything is pushing towards a contraction in
economic activity in the eurozone over the coming quarters,"
said economists at ODDO BHF, adding that Germany may already be
in recession as of the third quarter. 
    Europe is headed for a tough winter as doubts about energy
supply paint a bleak outlook for pick-up in economic activity.
Add to that the European Central Bank's clear priority for
inflation control, another 75 basis point hike in October is
"definitely" on the table, said ING's Senior Euro zone Economist
Bert Colijn.  urn:newsml:reuters.com:*:nZRN0057J4
    The STOXX 600 is down 20% for the year. It is also about 20%
away from record highs hit in January. 
    Interest rates were sharply increased through the week, with
the Fed delivering its third consecutive 75 basis-point hike and
Switzerland exiting the era of negative interest rates on
Thursday. The Bank of England raised rates by 50 bps.
 urn:newsml:reuters.com:*:nL1N30R1F1  urn:newsml:reuters.com:*:nL8N30T1E2
    As oil prices tumbled 5% on demand fears, BP  BP.L ,
TotalEnergies  TTEF.PA  and Shell  SHEL.L   .SXEP  weighed the
most on STOXX 600, down between 4.9% and 7%. The mining index
 .SXPP  logged its worst session in five months as metal prices
dropped.  MET/L   GOL/  O/R 
    All major sectors were well in the red. Banks  .SX7P  fell
3.6%, with Credit Suisse  CSGN.S  shedding 12.4% to hit a record
low.
    The Swiss bank sounded out investors for fresh cash, ources
said, approaching them for the fourth time in roughly seven
years as it attempts a radical overhaul of its investment bank.
 urn:newsml:reuters.com:*:nL1N30T1LJ
    Still, the banking index in Europe was set to sharply
outperform the benchmark STOXX 600 in September on bets of the
sector benefitting from a high-interest rate environment.
 (Reporting by Susan Mathew, Shreyashi Sanyal and Johann M.
Cherian in Bengaluru; Editing by Savio D'Souza, Subhranshu Sahu
and Angus MacSwan)
 ((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780; +91 961
144 3740; Twitter: https://twitter.com/s_shreyashi;))

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