European shares slip back to 2016 levels as Wall Street support evaporates

European shares fell on Thursday as support from a record bounce on Wall Street gave way to persistent worries about a slowing global economy and a trade spat between Washington and Beijing. The pan-European STOXX 600 index fell 0.8 percent to its lowest since November 2016, having risen as much as 0.5 percent in early trading, while US futures also fell sharply, paring part of the strong rally seen on Wednesday.
"To call for a bottom, we need at least a couple of days of strength, not just in price, but also in trading volume, breadth of the market, and fundamentally supported environment," said FXTM strategist Hussein Sayed.
"So far, we don't see a shift in fundamentals. Trade tensions between the US and China remains the biggest unknown factor for 2019," he added. Data earlier showed earnings at China's industrial firms in November dropped for the first time in nearly three years, pointing to a further loss of economic momentum.
By 1009 GMT, all sectors and national indexes in Europe were in the red, with thin holiday volumes helping to make trading more volatile. The euro zone's volatility gauge was up 4.5 points to its highest since October 26. The STOXX 600 benchmark remains set for its worst year since 2008, having fallen 14.4 percent in the year to date.
Germany's DAX index, whose big exposure to China has made it particularly vulnerable to trade jitters, is down 18.9 percent this year, while Italy's FTSE MIB, weighed down by concerns over the country's public finances, is down 16.7 percent. The Brexit-hit FTSE is down 13.5 percent Italian banks fell 0.9 percent, coming under fresh pressure after the top shareholder at Banca Carige put the troubled lender's future into question by blocking a 400 million euro ($456 million) new share issue. Intesa Sanpaolo, the country's largest retail bank, fell 0.9 percent.
Elsewhere, shares in Vinci rose as much as 1.7 percent after the French construction group said it was buying a majority stake in London's Gatwick airport for about 2.9 billion pounds ($3.7 billion). Its shares pared gains to trade up 0.3 percent. Among smaller companies. Earthport more than trebled its value, jumping 271 percent after Visa said it would pay 198 million pounds to buy the British payments firm.