European Stocks Close Lower On Weak Data, Rising Bond Yields

European stocks closed mostly weak on Thursday despite coming off the day’s lows, as higher U.S. bond yields raised concerns about inflation and the economic outlook. Concerns over high valuations also contributed to the weakness in the markets.

Data showing a contraction in euro area construction activity, drop in retail sales, and some disappointing earnings reports too weighed on stocks.

Investors were looking ahead to a speech from Federal Reserve Chair Jerome Powell later today for any hints about the recent jump in bond yields. The yield on 10-year U.S. Treasury Note moved to around 1.5% today.

The pan European Stoxx 600 ended down 0.37%. Germany’s DAX slid 0.17%, the U.K.’s FTSE 100 closed lower by 0.37%, Switzerland’s SMI ended 0.2% down, while France’s CAC 40 edged up 0.01%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Netherlands, Norway, Portugal, Russia and Sweden ended weak.

Czech Republic, Iceland, Ireland, Spain and Turkey closed higher, while Poland settled flat.

In the UK market, Rio Tinto plunged 8.7%, Scottish Mortgage, Antofagasta, BHP Group, Glencore, St. James Place, Standard Chartered, Johnson Matthey, Anglo American, Schrodders, Just Eat Takeaway lost 3 to 6.5%.

Standard Life, Mondi, Ocado Group, Natwest Group, Barclays Group, IHG and B&M also declined sharply.

Melrose, Sage Group, Reckitt Benckiser, BP, Royal Dutch Shell, British Land, National Grid, Flutter Entertainment, Pennon Group, CRH, United Utilites and Diageo closed stronger by 2 to 4%. Aviva moved up sharply after exiting its Italian businesses in a pair of deals totaling 873 million euros.

In the French market, Vivendi, STMicroElectronics, ArcelorMittal, Hermes International, LVMH, Credit Agricole and Societe Generale lost 1 to 4%.

Unibail Rodamco surged up more than 6%. Technip, Total, Safran, Sanofi, Orange, Thales, Danone and Sodexo also closed with strong gains.

In the German market, Infineon Technologies ended more than 6% down. Adidas, Deutsche Bank, Thyssenkrupp, Lufthansa and Deutsche Post lost 2 to 4%.

On the other hand, RWE, Munich RE, HeidelbergCement, Volkswage, Beiersdorf, Daimler and Henkel gained 1.5 to 2.5%.

In economic releases, German construction activity contracted sharply in February as severe bad weather caused widespread disruption to work on sites, survey results from IHS Markit showed earlier today. The construction Purchasing Managers’ Index fell to 41.0 from 46.6 in January.

Eurozone retail sales declined more than expected in January on weak non-food products turnover, data from Eurostat showed. The retail sales volume decreased 5.9% on month, in contrast to a 1.8% rise in December. Economists had forecast sales to drop moderately by 1.1%.

The euro area jobless rate remained unchanged in January, the Eurostat reported. The unemployment rate held steady at 8.1% and up from 7.4% in the same period last year. The rate was forecast to rise to 8.3%.

The UK construction sector returned to positive territory in February, survey results from IHS Markit and Chartered Institute of Procurement & Supply showed.

The construction Purchasing Managers’ Index rose more-than-expected to 53.3 from 49.2 in January. A score above 50.0 indicates expansion. The expected level was 51.0.

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