The STOXX Europe 600 Index was down about 5% for the week, hitting new 52-week lows.
Luxury brands were heavily sold amid concerns of weaker-than-expected Chinese growth and new Chinese customs restrictions.
Italy’s FTSE MIB Index was down 5% for the week and fell into bear market territory—a decline of at least 20% from a recent high.
Germany’s DAX 30 and France’s CAC 40 lost about 5%.
The UK’s FTSE 100 dropped 4.4% and entered correction territory, defined as a drop of at least 10% from a recent peak.
Yields on Italian 10-year government bonds hit 3.71% as worries about the country’s finances mounted.
The country’s Deputy Prime Minister Matteo Salvini insisted that the government’s budget won’t change and that his coalition government won’t back away from
campaign promises to raise welfare and pension spending and cut taxes despite the negative reaction from financial markets and European Union (EU) officials.
As Italy continued its standoff with the EU, the spread between yields on 10-year Italian and German bonds, seen as a gauge of financial strain, widened, touching
308 basis points, close to its highest level since 2013.
Finance Minister Giovanni Tria said the selloff is of concern but that the jump in yields is not justified by Italy’s economic fundamentals.
Meanwhile, the International Monetary Fund’s top Europe official said Italy should be taking measures to reduce its deficit in accordance with EU fiscal rules, which
require countries with high debt levels to reduce indebtedness.
