European Shares Retreat As Business Activity Contracts In September

European stocks were broadly lower on Thursday after a survey showed the euro area private sector shrank for the first time in seven months in September.

The final HCOB composite output index fell to 49.6 in September from a three-month high of 51.0 in August – bolstering expectations for an interest rate cut at the European Central Bank’s meeting on Oct 17.

Elsewhere, U.K. business activity growth eased to a three-month low in September.

In France, President Emmanuel Macron endorsed a temporary tax on the country’s largest companies to get the public finances back on track.

Investors also fretted about the possibility of a wider war in the Middle East after Iran launched its largest-ever attack on the country.

The pan European STOXX 600 fell 0.7 percent to 517.71 after ending flat with a positive bias on Wednesday.

The German DAX dipped 0.7 percent and France’s CAC 40 shed 0.8 percent while the U.K.’s FTSE 100 was up 0.3 percent.

The British pound weakened after Bank of England Governor Andrew Bailey reportedly hinted at ‘more aggressive’ path for cutting interest rates if inflation news stays positive.

In a wide-ranging interview with the Guardian, Bailey held out the prospect of the Bank becoming a “bit more aggressive” with interest-rate cuts.

In corporate news, Ericsson fell about 1 percent on reports that the telecom supplier is considering moving and leaving Kista.

Telecom Italia rallied 2.3 percent after Italy made a new offer for its Sparkle submarine cable unit.

Stellantis NV slumped 4.2 percent after output dropped at all six of its factories in Italy in the first nine months.

British Land Company shares were down 0.7 percent in London. The property firm said it has acquired a portfolio of seven retail parks for 441 million pounds.

Tesco jumped 3.1 percent. The supermarket group lifted its annual profit forecast after profit and revenue increased in the first six months of the financial year.

Telecom Plus gained 0.7 percent as it reported continued robust growth in customer numbers in a first-half update.

France’s Alstom rallied 2.2 percent after receiving an order from Proxima for 12 Avelia Horizon very high-speed trains.

German software maker SAP SE dropped 1.3 percent after a U.S. price-fixing probe into the company.

Lufthansa was little changed. The flag carrier said that it is resuming certain flights to destinations in the Middle East but will not use Iranian and Iraqi airspace as a precautionary measure due to the ongoing conflict, until further notice.

LANXESS tumbled nearly 3 percent. The specialty chemicals company has signed a contract to sell its Urethane Systems business to Japanese UBE Corporation.

Residential landlord Vonovia fell 1.6 percent after saying it expects a total liquidity inflow of around 4 billion euros for 2024, same as the previous year’s level.