A drop in German equities sent European stocks lower, reversing earlier gains as the euro climbed.
The Stoxx Europe 600 Index slipped 0.2 percent to 395.47 at the close of trading. Euro Stoxx 50 Index futures expiring next month lost 0.6 percent at 5:03 p.m. in London.
The Stoxx 600 rose as much as 1.1 percent earlier as data showed the euro area’s economy expanded at its fastest pace in almost two years. The gauge then pared its increase after a U.S. report showed retail sales were little changed in April, helping drag the dollar lower against the euro.
“A stronger euro leads to weaker European stocks,” said Manish Singh, who oversees about $2 billion as Crossbridge Capital’s head of investments in London. “Investors should buy equities on the dips. If the bond market is selling off, what is there to buy? Equities will be supported by flow. ECB still has the back of the market, and euro-zone growth is looking up.”
Germany’s DAX Index slid 1.1 percent, erasing an advance of as much as 1.1 percent. Its economy grew less than forecast, while gross domestic product in France and Italy advanced more than expected. The euro-area’s GDP climbed 0.4 percent in the first quarter, underpinned by the start of the European Central Bank’s largest-ever stimulus program.
The Stoxx 600 fell for a second day, after a rout in bonds sent equities tumbling on Tuesday, with the correlation between the two asset classes reaching its highest level since 2013. The benchmark stock index has lost 4.5 percent from its April record, trimming its annual rally to 16 percent.
Italy’s FTSE MIB Index added 0.5 percent on Wednesday after climbing as much as 1.3 percent, and Portugal’s PSI 20 Index advanced 0.9 percent. France’s CAC 40 Index slipped 0.3 percent after earlier rising as much as 1.4 percent.
Among stocks moving on corporate news, Mondi Ltd. surged 8.9 percent after the producer of kraft paper and industrial bags said earnings jumped. Moncler SpA rallied 9.1 percent after the Italian maker of luxury outwear reported sales and profit that topped predictions. Bouygues SA added 2.6 percent after posting a smaller-than-estimated loss. SABMiller Plc added 2.1 percent after the world’s second-biggest brewer reported annual pretax profit that beat analysts’ estimates.
Compass Group Plc fell 3.8 percent after the world’s largest caterer reported first-half earnings that missed projections. Elekta AB slumped 22 percent. Its chief executive officer quit after the Swedish company said full-year results were “significantly below” its forecast.
UBS Group AG lost 1.6 percent as a person familiar with the matter said the U.S. Justice Department will rip up its agreement not to prosecute the Swiss lender for rigging benchmark interest rates.