European stock markets extended their losing streak on Thursday, with benchmark indexes in Frankfurt and London hitting seven-month lows as fears of a global slowdown took hold. As Sonia Legg reports, minutes from the U.S. Federal Reserve's July meeting dented expectations for a rate hike in mid-September, amid worries over lagging inflation and slowing growth in China.
It's becoming a daily event. First shares in Asia hit a two year low, then German and British stocks hit their lowest since January. It's shaping up to be the worst month for markets in more than three years. The U.S. Fed's pussy footing over an interest rate hike raised fears about a weakening global economy. Craig Erlam is a market analyst at Oanda SOUNDBITE: Craig Erlam, Senior Market Analyst, Oanda, saying (English): "People haven't believed Yelland for all these months that they want to raise interest rates this year so I think they are clutching at straws really." Erlam believes the rate hike issue is being blown out of proportion because there hasn't been one for almost a decade. SOUNDBITE: Craig Erlam, Senior Market Analyst, Oanda, saying (English): "What we are looking at here is a quarter of a percentage point rate hike which let's be honest is absolutely nothing. It is going to have zero impact on the real economy. I don't think consumers, homeowners, borrowers are going to notice much of a difference from a such small rise in interest rates." But the markets will. And combine that with worries over China following last week's devaluation and we have a problem, particularly in a relatively weak euro zone. SOUNDBITE: Craig Erlam, Senior Market Analyst, Oanda, saying (English): "One thing is the inflation impact - if they are exporting deflation to a region already experiencing extremely low levels of inflation that's going to be a concern. I think it is more of a concern to the euro zone than it is to the U.S. or UK" Pressure on emerging currencies also intensified. Turkey's lira hit a record low and Kazakstan's tenge plunged 25% after authorities abandoned its peg and let it float.