China’s COVID protests weigh on European shares

European shares fell from three-month highs on Monday, led by losses in energy and mining stocks, as widespread and rare protests in China against stringent COVID-19 curbs sparked a wave of selling in global markets.

The pan-European STOXX 600 index slipped 0.5 percent, tracking a sharp decline in Asian stocks.

China posted record-high COVID-19 infections on Monday, after a weekend of protests, raising worries about the management of the country’s zero-COVID policy and its impact on the world’s second-largest economy.

“A widening of infections could add to supply chain interruptions, with China’s problems spilling into global markets,” Mark Haefele, chief investment officer at UBS Global Wealth Management wrote in a note to clients.

“Social discontent related to zero-COVID adds to execution and implementation risks for the government. We do not expect economic or market headwinds in China to abate significantly over the coming months.”

European oil stocks tumbled 1.9 percent as crude prices shed almost 3 percent on worries about the outlook for the world’s biggest crude importer, while miners fell 1.4 percent on the back of sliding metal prices.

Other European sectors exposed to China, including automakers and luxury, also fell in morning trade.

The benchmark STOXX 600 notched its sixth consecutive weekly gain on Friday, marking a recovery of about 15 percent from its September lows on hopes that the Federal Reserve will shift to smaller interest rate hike amid signs of cooling U.S. economy.

U.S. jobs data later this week might shift expectations around the Fed’s policy move in December, with traders currently anticipating a 50-basis-point rate hike.

Preliminary reading of euro zone inflation for November is due on Wednesday, with the numbers expected to show a slight cooling from the record levels hit in October.

European Central Bank chief Christine Lagarde will testify before the European parliament later in the day.

Credit Suisse’s shares slipped 4 percent to a record low. The head of its Swiss unit said “some customers have withdrawn some of their money, but very few have actually closed their accounts,” in an interview to a local newspaper on Sunday.

Brenntag SE fell 9 percent after the German chemicals distributor said it held preliminary discussions for a potential acquisition with U.S. rival Univar Solutions Inc.

Shares of Adler Group surged 61.5 percent after the German property firm secured a deal with bondholders over $971 million debt.