European Stocks Tumble Amid U.S. Clampdown on Tax Inversions

LONDON (The Deal) -- European stock indices plunged on Tuesday amid profit warnings from high-profile companies and fears that a U.S. clampdown will stem the tide of American deal-making in Europe.

In London, the FTSE 100 tumbled 1.17% at 6,693.82. In Frankfurt, the DAX was down 1% at 9,651.67. The CAC in Paris fell 1.53% at 4,371.62.

Meanwhile, declines in Markit Economics purchasing managers' indices for both manufacturing and the services sector in the eurozone in September painted a picture of economic weakness.

Investors are looking for a slight rise in Markit Economics' PMI index for the U.S., which will be out at 9.45 a.m. EDT.

In London, U.K. pharmaceuticals and health care companies that either were or are targets of U.S. bids plunged after the Treasury and the Internal Revenue Service announced initiatives to curb tax inversions Monday. Treasury Secretary Jack Lew said the Obama administration also wanted congressional action to stop U.S. companies moving their headquarters elsewhere to cut their tax bills.

Pfizer  (PFE) bid target AstraZeneca (AZN)  fell by well more than 5%; Smith & Nephew, which was briefly a target of Stryker (SYK) , declined more than 6%; and Shire (SHPG) , which in July agreed to a takeover by AbbVie (ABBV) , was down almost 7% on concern the deal may collapse.

In London, sugar producer Tate & Lyle fell almost 16% after warning that its first half had been challenging and delivering a full-year profit forecast that fell below analysts' expectations.

Restructuring retailer Mothercare tumbled almost 12% after announcing plans for a 100 million pounds ($163.8 million) rights issue.

But Tesco (TSCDY) , the U.K.'s leading retailer, rose 2.5% on news that new CFO Alan Stewart would join immediately rather than in December after Tesco shook investors on Monday by announcing it had overstated first-half profit guidance to the tune of 250 million pounds.

In Vienna, Raiffeisen Bank AG was down 9% by mid-morning after falling as much as 12% after it lifted its provisions for bad debt, and said this will lead to its first ever full-year loss. The Central and Eastern European-focused bank blamed its problems on "higher expected risk costs in Ukraine" but said it didn't need a capital injection.

In Oslo, fertilizers maker Yara International was up more than 7% after disclosing talks about a "merger of equals" with Deerfield, Ill.-based CF Industries (CF) .

In Amsterdam, Royal Philips (PHG)  was up more than 3% after announcing plans to split the company and focus on professional and consumer health care and "lifestyles" equipment.

In Hong Kong, the Hang Seng closed down 0.49% at 23,837.07. In China, purchasing managers' data compiled by HSBC Holdings and Markit Economics unexpectedly improved in September, and mainland Chinese indices closed higher.

Japanese markets were closed on Tuesday.

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