European shares set for monthly loss on virus, US election worries

European stocks slipped on Wednesday as surging coronavirus cases and a chaotic debate that highlighted risks from the US presidential election sapped risk appetite at the end of a tumultuous month for financial markets.

The pan-European STOXX 600 index fell 0.4pc tracking Wall Street futures lower, after a messy face-off between US President Donald Trump and Democratic rival Joe Biden overnight stoked caution among investors.

Britain reported 7,143 new coronavirus cases on Tuesday, the highest single figure to date, and Germany looked set to tighten COVID-19 restrictions in an effort to contain the spread of the virus over autumn and winter.

Travel & leisure stocks fell 1.8pc, the most among all the sectors, while tech shares also lost ground with Infineon Technologies and STMicro down over 1pc following US chipmaker Micron Technology's downbeat revenue forecast.

"It was an angry exchange of words, but not much came out that might make investors change their mind one way or the other," said Simona Gambarini, markets economist at Capital Economics, referring to the US presidential debate.

"A much bigger factor affecting markets at the moment is a second wave of virus cases in Europe and rising numbers in the US," Gambarini added.

Defensive sectors, considered more stable during times of economic uncertainty, such as utilities, real estate and food & beverage were among the few gainers.

The STOXX 600, while on course to end the third quarter flat, is set to close September with a 1.7pc drop, its biggest since a near 15pc decline in March, when pandemic-driven selling in markets hit a peak.

Dealmaking activity also triggered big moves in stocks.

Dutch specialty chemicals company DSM rose 3.6pc after Germany's Covestro said it would buy its resins and functional materials unit for about 1.6 billion euros ($1.88 billion). Covestro fell 6.3pc.

TP ICAP, the world's biggest inter-dealer broker, slumped 12.1pc after revealing it was in advanced talks to buy electronic trading network Liquidnet Holdings for $600 million to $700 million.

French waste and water management company Suez SA jumped 7.1pc after bigger rival Veolia raised its offer to buy a 29.9pc stake in the company.

Helping oil stocks defy weakness among growth-sensitive sectors, Royal Dutch Shell rose 1.1pc after revealing plans to cut up to 10pc of its workforce.