FTSEurofirst, Euro STOXX 50 down about 2 percent

LONDON, Aug 12 (Reuters) – European shares extended this week’s sell-off on Wednesday after China pushed the yuan even lower, hitting exporters such as carmakers and luxury goods companies.

The pan-European FTSEurofirst 300 index fell 2 percent, and the euro zone’s blue-chip Euro STOXX 50 index 2.2 percent. The FTSEurofirst fell 1.7 percent on Tuesday.

The yuan hit a four-year low after China pushed the currency down overnight following Tuesday’s devaluation.

The People’s Bank of China move has sparked fears of a global currency war and accusations that Beijing was giving an unfair advantage to its struggling exporters.

The slump in the yuan has affected German carmakers and European luxury goods stocks, for whom China is an important export market. It has also weighed on energy and mining shares as China is a major global consumer of commodities.

The STOXX Europe 600 autos sector dropped 3.5 percent while the index housing the region’s top luxury goods makers also slid 3.3 percent lower.

“We had a decent run-up but this is all unwinding pretty quickly. A competitive devaluation of currencies is never good,” Mirabaud Securities European equity sales executive, Rupert Baker, said.

“I’d be avoiding areas such as carmakers and luxury goods companies,” he said.

Carmaker BMW fell 3.7 percent, while luxury goods group LVMH slumped nearly 4 percent.

Consumer goods group Unilever also lost ground after being downgraded by Goldman Sachs, while Dutch insurer Delta Lloyd fell sharply for the second day in a row.

Delta Lloyd’s shares had plunged 20 percent on Tuesday on concerns about its financial capital position, and the stock lost another 10 percent on Wednesday after Goldman Sachs downgraded the stock.

The FTSEurofirst and Euro STOXX 50 indexes remain up about 12 percent since the start of 2015, partly due to economic stimulus measures from the European Central Bank which have buoyed European stock markets.

However, Deutsche Bank strategists warned of volatile times ahead.

“Our rates strategists think that the China devaluation is a recipe for higher volatility across all asset classes,” they wrote in a note.

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