European Stocks Close Lower On Inflation Worries, Virus Concerns

European stocks ended weak on Friday as disappointing earnings update from Amazon and fresh losses in Chinese markets amid concerns about China’s policy risks outwieghed data showing a fairly strong rebound in euro area economic growth in the second quarter.

Concerns about the spread of the delta variant of the coronavirus in several places across Europe weighed as well.

The pan European Stoxx 600 drifted down 0.45%. The U.K.’s FTSE 100 declined 0.65%, Germany’s DAX slid 0.61% and France’s CAC 40 ended 0.32% down. Switzerland’s SMI gained 0.25%.

Among other markets in Europe, Austria, Belgium, Finland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden ended weak.

Czech Republic, Denmark, Greece, Iceland and Turkey closed higher.

In the UK market, Intertek tumbled 8% despite the assurance and product testing group reporting a rise in first-half profits.

IAG declined 7.4% after it plunged to a €2bn (£1.7bn) half year loss. Intermediate Capital Group, Weir Group, Informa, Whitbread, Rolls-Royce Holdings, Melrose Industries, BP, Evraz and Compass Group lost 2 to 4%.

Mining stocks Anglo American, Rio Tinto, Antofagasta, BHP Group and Glencore declined amid rising concerns about harsh regulation on a range of private companies in China.

NatWest Group ended more than 1% down despite the bank returning to profit and announcing plans for a fresh round of dividends and share buybacks.

Pearson moved up more than 3% as the company raised its interim dividend after reporting improved sales across all arms of its business in its latest half-year.

Rightmove, Segro, Croda International, Avast, Sage Group, United Utilities, Just Eat Takeaway, Unilever, Auto Trader Group and BT Group ended notably higher.

In the French market, Unibail Rodamco, Air France-KLM, Carrefour, Engie, Technip, Thales and Safran lost 2 to 4%.

Renault declined nearly 3% after the company said the supply chain issue and rising raw material prices could curb further recovery in profitability this year.

Atos, Credit Agricole, WorldLine, STMicroElectronics and Sodexo also closed notably lower.

BNP Paribas shares declined despite the lender reporting a 26% rise in net income in the second quarter and announcing an additional dividend.

Essilor surged up nearly 4% after raising its full-year guidance. Saint Gobain gained 3.2%, while Legrand, Schneider Electric and Danone climbed 2 to 2.25%.

In Germany, Fresenius Medical Care declined more than 3% despite posting better-than-expected second quarter results and raising its 2021 earnings guidance. Fresenius and Lufthansa also lost more than 3%.

Thyssenkrupp, Infineon Technologies, Deutsche Post, Bayer, Daimler and Deutsche Bank shed 1 to 2.3%. Linde shares gained nearly 3%.

The preliminary flash estimate published by Eurostat showed eurozone gross domestic product expanded 2% sequentially in the second quarter, reversing the 0.3% drop posted in the preceding period. The growth rate was bigger than the expected 1.5%.

On a yearly basis, GDP rebounded 13.7% after shrinking 1.3% in the first quarter. GDP was forecast to grow 13.2%.

Eurozone inflation accelerated more-than-expected in July, rising 2.2% in the month from 1.9% in June, flash data from Eurostat showed.

Another preliminary report from Eurostat showed euro area unemployment rate dropped to 7.7% in June (the lowest level in over a year), falling for a second month in a row, after coming in at 8% in May. The rate was expected to remain unchanged at May’s original 7.9%.

The French economy rebounded at a faster-than-expected pace in the second quarter, underpinned by household spending and investment, flash data from the statistical office Insee revealed. Gross domestic product rebounded 0.9% in the second quarter, after being flat in the first quarter. Economists had forecast a quarterly growth of 0.8%.

In the second quarter, GDP was 3.3% below the level of the fourth quarter of 2019, as compared to 4.2% in the two previous quarters, the statistical office said.

France consumer price inflation slowed 1.2% in July from 1.5% in the previous month, provisional data from the statistical office Insee showed on Friday. Economists had expected inflation to come in at 1%. On a monthly basis, consumer prices edged up 0.1 percent, the same as in June. Prices were forecast to fall 0.1 percent.

Germany’s gross domestic product grew 1.5% from the first quarter, when it was down 2.1%, data from Destatis showed. Nonetheless, the second quarter growth was slower than the expected expansion of 2%.

On a yearly basis, GDP grew by calendar-adjusted 9.2%, in contrast to the 3.1% drop posted in the first quarter. GDP was forecast to climb 9.6%.