European Stocks Close Sharply Lower On Worries About Global Growth Outlook

European stocks closed sharply lower on Thursday amid rising concerns over a possible slowdown in global growth momentum in the coming quarters after China announced some policy easing.

The Chinese central bank said late Wednesday that it would stimulate the economy with cuts to the amount of funds banks need to hold in reserve.

Worries about the spread of the delta variant of the coronavirus and its impact on economic growth further dented sentiment. The French Minister for European Affairs has reportedly advised people not to travel to Portugal or Spain where coronavirus cases are rising.

Inflationary concerns also weighed after the minutes from the Fed’s June meeting showed the U.S. central bank has been caught off guard by the recent rise in inflation.

The minutes of the Fed’s mid-June FOMC meeting showed officials felt substantial further progress on the economic recovery “was generally seen as not having yet been met,” but agreed to act if inflation or other risks increased.

A sell-off on Wall Street amid data showing an unexpected increase in jobless claims last week, and falling bond yields hurt as well.

The pan European Stoxx 600 tumbled 1.72%. The U.K.’s FTSE 100 shed 1.68%, Germany’s DAX drifted down 1.73% and France’s CAC 40 lost 2.01%, while Switzerland’s SMI declined 1.33%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkey ended with sharp to moderate losses. Iceland edged up marginally.

In the UK market, Intermediate Capital Group, B&M, JD Sports Fashion, Burberry Group and Anglo American Plc lost 4 to 5%. Persimmon ended lower by about 4.8% despite posting a strong set of results for the first six months of the year.

Prudential, Barratt Developments, Whitbread, Associated British Foods, Glencore, Natwest Group, 3i Group, Rio Tinto, Barclays Group, Fresnillo and Coca-Cola also declined sharply.

Food delivery group Deliveroo rallied 4.5% after raising its forecasts for sales this year, but retreated later and ended lower by about 2.2%.

In the French market, Carrefour, Sodexo, Societe Generale, Kering, ArcelorMittal, Publici Groupe, LOreal, LVMH, BNP Paribas, STMicroElectronics, Vivendi, Renault and Credit Agricole ended lower by 1.6 to 5%.

In Germany, Volkswagen, HeidelbergCement, Deutsche Bank, Continental, Infineon Technologies, Daimler, Siemens, RWE, Adidas, BMW, Puma and Allianz shed 2 to 4%.

Shares of TeamViewer plunged more than 14% after the company announced a weaker second-quarter billings growth forecast.

In economic news, German exports expanded at a marginal pace in May, data from Destatis revealed. Exports grew only 0.3% month-on-month in May, following a 0.2% rise in April.

At the same time, imports advanced 3.4%, reversing a 1.4% drop in the previous month.

Switzerland’s jobless rate decreased marginally in June, data from the State Secretariat for Economic Affairs showed. The jobless rate fell a seasonally to 3.1% in June from 3.2% in May.

On an unadjusted basis, the unemployment rate fell to 2.8% in June from 3.1% in the previous month.

The European Central Bank said on Thursday it will aim for a symmetric 2% inflation target and will allow a temporary overshoot.

“This target is symmetric, meaning negative and positive deviations of inflation from the target are equally undesirable,” the bank said in its latest monetary policy strategy review statement. The central bank’s earlier targeted Eurozone inflation “below, but close to 2%.”

In the U.S., the Labor Department said initial jobless claims crept up to 373,000, an increase of 2,000 from the previous week’s revised level of 371,000.

The uptick surprised economists, who had expected jobless claims to drop to 350,000 from the 364,000 originally reported for the previous week.

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