European Stocks Close Lower On Concerns About Interest Rate Outlook

European stocks closed lower on Friday, weighed down by concerns about the outlook for interest rates. Rising tensions between China and Taiwan hurt as well.

The pan European Stoxx 600 ended down 0.19%. The U.K.’s FTSE 100 dropped 0.26%, and France’s CAC 40 edged down 0.09%, while Germany’s DAX settled lower by 0.01%. Switzerland’s SMI lost 0.29%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Iceland, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed lower, while Netherlands ended higher.

In the UK market, National Grid tumbled 11.5% after the company announced plans to raise around £7 billion in support of renewable energy sources in the UK and US. The announcement has raised concerns about the company’s ability pay dividend to its shareholders.

RS Group, Fresnillo, Severn Trent, Centrica, Smith (DS), Haleon, Sage Group, Lloyds Banking Group, British American Tobacco, Entain, Anglo American Plc, RightMove and Whitbread lost 1 to 2.6%.

Ocado Group rallied more than 6%. Marks & Spencer gained about 2.3%, while Airtel Africa, Phoenix Group Holdings, Smurfit Kappa Group, Kingfisher, Legal & General, Aviva and Schrodders gained 1 to 2.3%.

Intertek Group shares moved up sharply. The company backed its full-year expectations after a strong start to the year with 7% growth in like-for-like revenue.

In the German market, Sartorius and Brenntag both ended lower by more than 3%. Vonovia, RWE, Puma, Merck and SAP also ended notably lower.

Siemens Energy climbed more than 4%. Covestro, Fresenius, Fresenius Medical Care, Zalando, Munich RE and Deutsche Bank gained 1 to 2.5%.

In the French market, Edenred, Airbus Group and Eurofins Scientific loat 1.2 to 1.6%.

Renault rallied 5.2%. Teleperformance gained about 2.35%. Bouygues and Schneider Electric also closed on firm note.

In economic news, the German economy expanded as initially estimated in the first quarter, underpinned by rebounding investment and exports, data from Destatis revealed.

GDP expanded 0.2% sequentially in the first quarter, in contrast to the 0.5% decrease in the preceding three months.

On a yearly basis, calendar-adjusted GDP shrank 0.2%, the same rate as seen in the fourth quarter and in line with the preliminary estimate.

Separately, the confidence among French manufacturers worsened unexpectedly in May and returned to below its long-term average, monthly data from the statistical office INSEE revealed.

The manufacturing sentiment index dropped to 99.0 in May from 100.0 in the previous month. Economists had expected confidence to remain stable at 100.0.

Elsewhere in the U.K., official data showed retail sales declined more than expected in April as a result of poor weather.

The retail sales volume dropped 2.3% on a monthly basis, following a revised 0.2% drop in March. Economists had forecast a 0.5% drop for April. On a yearly basis, retail sales decreased 2.7%, in contrast to the 0.4% increase in March.