June 14, 2016 / 8:32 AM / 2 years ago

European shares set new 3-month low, GAM plummets 18 pct

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details)

* FTSEurofirst 300 index down 1.1 percent

* GAM slumps 18 pct after profit warning

* Premier Farnell surges 50 pct on M&A news

By Atul Prakash

LONDON, June 14 (Reuters) - European shares fell for a fifth straight session on Tuesday, with investors becoming jittery before next week’s referendum in Britain on its membership of the European Union and a two-day meeting of the Federal Reserve starting later in the day.

Swiss money manager GAM Holding fell nearly 18 percent to a 4-1/2 year low after warning it expects a roughly 50 percent year-on-year fall in first-half underlying profit before tax, mainly due to lower performance fees.

However, Premier Farnell surged 50 percent after Daetwyler Holding agreed to buy it in an all-cash offer that valued the British electronic component distributor at just over 1 billion Swiss francs ($1.04 billion).

The pan-European FTSEurofirst 300 index fell 1.1 percent to 1,270.68 points by 0815 GMT after hitting its lowest since February. The STOXX Europe 600 was also down 1.1 percent, while the European miners fell 1.8 percent, the top sectoral decliner, tracking weaker metals prices.

The Euro STOXX 50 volatility index, Europe’s main gauge of equity market investor anxiety known as the VSTOXX index, surged to a four-month high of 36, against 20 about two weeks ago, over Brexit fears.

“Brexit concerns are pushing the volatility index higher and particularly hitting financials. This increased volatility is likely to last at least until the referendum,” Koen De Leus, senior economist at KBC in Brussels, said.

Two opinion polls published by ICM showed on Monday that Britain’s “Out” campaign had widened its lead over the “In” camp ahead of the June 23 referendum on Britain’s EU membership, adding to investors’ general nervousness.

The European banking index was down 0.7 percent, taking total losses to more than 26 percent this year. It is the worst performing sector in Europe in 2016.

Uncertainty over this week’s two-day Fed meeting, starting later on Tuesday, also weighed on markets. The U.S. central bank is widely expected to leave rates unchanged after the much weaker-than-expected May nonfarm payrolls report, analysts said.

“Markets will continue to price in a worst case scenario meaning further declines are likely in the days ahead except if there would be a substantial shift in public opinion or some kind of verbal intervention from politicians or central bankers to bring back calm into the markets,” Markus Huber, trader at City of London Markets, said.

Today’s European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA. (Editing by Jon Boyle)

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