European stocks slide; gold at 2-year low

EUROPEAN stock markets have fallen sharply and gold plunged to a two-year low after news the powerhouse Chinese economy had slowed in the first quarter of 2013, dealers say.

In midday deals on Monday, London's FTSE 100 index of top companies sank 1.19 per cent to 6,308.17 points, Frankfurt's DAX 30 shed 1.04 per cent to 7,662.35 points and in Paris the CAC 40 lost 1.02 per cent to 3,691.13 points.

On the London Bullion Market, gold prices slumped to $US1,398.85 per ounce. That was the lowest level since March 2011 and compared with $US1,535.50 late on Friday.

And silver recoiled $US23.02 per ounce - hitting a low point last witnessed in October 2010.

China said its economy grew 7.7 per cent in the first quarter of this year, well below the 8.0 per cent forecast in a poll of 12 economists by AFP and worse than the 7.9 per cent in the previous three months.

The news raises questions about the strength of the world's No 2 economy, which is a key driver of global growth, analysts said.

"Weak economic growth in China has taken investors by surprise this morning and commodity stocks are weighing on the FTSE 100 index," said analyst Mike McCudden at online brokerage Interactive Investor.

"With the recent run or weaker global economic data investors have reached an impasse, and without a great deal in sight this week to inspire them, we should see markets drift lower," McCudden said. "Ongoing eurozone concerns will not help."

The data sparked a sell-off of mining stocks in Europe on Monday because China is a major consumer of raw materials.

"With the drops in gold and silver making the headlines, Fresnillo, Polymetal and Randgold Resources are the worst hit, all down over 5.0 per cent," noted CMC Markets Matt Basi.

Fresnillo saw its share price collapse by 12.41 per cent to 1,115 pence, Evraz shed 10.03 per cent to 165 pence and Randgold dropped 9.68 per cent to 4,478 pence.

Antofagasta stocks fell 5.68 per cent to 955.5 pence and Xstrata lost 5.70 per cent to 983.6 pence.

In Paris, shares in European metals giant ArcelorMittal recoiled 4.07 per cent to 34.325 euros.

Gold had already dived under $US1,500 per ounce late on Friday, hit by fears that the US Federal Reserve could rein in its stimulus plans, and after news that crisis-hit Cyprus may sell reserves as part of its bailout.

In foreign exchange activity on Monday, the euro slid to $US1.3106 in London midday deals, from $US1.3066 late in New York on Friday.

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