Rolls-Royce shares nosedive on latest profit warning

A grim profits warning from Rolls-Royce sent the British engine maker's shares crashing by a fifth on Thursday, as a raft of disappointing earnings rocked European equities with Wall Street catching the gloomy mood.

The company's share price slumped 19.57 percent to 536.50 pence at the close in London after Rolls delivered its fourth profits warning in a year, helping the FTSE-100 index to shed 1.88 percent over the session.

Rolls-Royce said 2016 profits would take a hit of £650 million ($986 million, 918 million euros) as a result of weak demand in its aerospace and marine markets. That compared with a previous estimate of £300 million given in July.

In addition, the group cautioned that 2015 pre-tax profit would be "at the lower end" of its forecast range of between £1.32 billion and £1.47 billion.

"While 2015 remains broadly as expected, the outlook for 2016 is very challenging," chief executive Warren East declared.

Elsewhere in Europe, the energy sector also suffered.

In Frankfurt, shares in German giant RWE tanked 9.6 percent to 11.27 euros after saying 2015 profits would "only just" meet the company's forecast range of between 1.1 billion euros and 1.3 billion euros.

RWE added that profits slid in the nine months to September, hit by an operating loss at its troubled British division Npower.

The second biggest faller in Frankfurt was peer E.ON, whose stock sank 3.2 percent to 8.88 euros.

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