European Stocks Trim Weekly Gains on Economic-Growth Concerns

Europe Stocks Trim Weekly Gains on U.K. PMI Data
  • PMI data show mixed picture, with U.K. economy hurt by Brexit
  • FTSE 100 rises on pound weakness; FTSE 250 of midcaps falls

European equities closed little changed, paring a second weekly advance, amid mixed data on the services and manufacturing industries.

The Stoxx Europe 600 Index dropped 0.1 percent, trimming a loss of as much as 0.7 percent. Germany’s manufacturing output reached the highest level since early 2014 and a composite Purchasing Managers’ Index for France stood at 50, the threshold that divides expansion from contraction, according to Markit Economics. For the U.K., the composite data slumped to its lowest since April 2009 in the wake of the referendum to leave the European Union.

“Investors remain concerned on the prospects for economic growth in the euro zone after Brexit,” said Arno Endres, head analyst at Luzerner Kantonalbank in Switzerland. “The confidence level will be a problem longer term because overall central banks are running out of ammunition, and I’m not so confident helicopter money will have the desired effect. Earnings are contributing to the negativity as it’s been a mixed picture.”

While the Stoxx 600 closed at a four-week high on Wednesday, it’s alternated between daily gains and losses for most of the last week amid corporate earnings and speculation about central-bank stimulus. President Mario Draghi said on Thursday the European Central Bank will consider increasing stimulus when it has a cleared picture of the impact of the Brexit vote.

The Stoxx 600 ended little changed for the past two days amid thin trading, trimming its weekly advance to 0.7 percent. On Friday, the number of its shares changing hands was almost 40 percent below the 30-day average.

Britain’s FTSE 100 Index of megacaps rose 0.5 percent, reversing a 0.5 percent drop as the pound weakened following the PMI data. The FTSE 250 Index tracking mid-cap companies, more sensitive to the domestic economy, dropped 0.4 percent.

Miners and energy producers in the Stoxx 600 fell amid declines in commodities. Skanska AB lost 4.8 percent as the Swedish construction company lowered its outlook for U.K. non-residential construction activity. Spain’s Banco de Sabadell SA tumbled 7.5 percent after posting a drop in quarterly profit. Vodafone Group Plc, on the other hand, rose 4.6 percent to its highest price since August after reporting service revenue that beat analysts’ estimates.

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