EUROPE MARKETS: European Stocks Pull Back From 2-week High After Mixed PMIs
23 September 2016 - 8:07PM
Dow Jones News
By Sara Sjolin, MarketWatch
But Stoxx 600 stays on track for 2.3% weekly gain
European stocks moved decisively lower on Friday, pulling back
from the prior day's rally after the latest round of economic data
painted a mixed picture of the region's recovery.
The Stoxx Europe 600 index slumped 0.7% to 345.52, partly
erasing a 1.6% advance from Thursday that saw the benchmark close
at its highest level since Sept. 8.
For the week, the Stoxx 600 is still eyeing a 2.3% advance, its
biggest since mid-July.
Thursday's rally
(http://www.marketwatch.com/story/european-stocks-climb-as-fed-inspires-risk-taking-2016-09-22)
came after the U.S. Federal Reserve refrained from raising interest
rates and indicated it will keep monetary policy loose for at least
another few months. Traders in Europe and the U.K. closely watch
where U.S. interest rates are headed, as they are a major driver
for the global economy and currency markets.
PMIs in the frame: However, on Friday the optimism fizzled,
partly due to a disappointing reading in the purchasing managers'
index for September
(http://www.marketwatch.com/story/french-revival-lifts-eurozone-pmi-germany-falters-2016-09-23).
The eurozone flash composite PMI dropped to a 20-month low of 52.6,
missing forecasts of a 52.8 print.
"It is apparent that [the] eurozone is currently finding it a
real struggle to break out of lackluster growth, even if there is
little evidence that the U.K.'s Brexit vote in June has had a
significant dampening influence," said Howard Archer, chief U.K.
and European economist at IHS Global Insight.
"We suspect eurozone economic activity could be increasingly
hampered by political uncertainty over the coming months, with
elections due in 2017 in France and Germany, Spain facing a third
general election before long, and the Renzi government looking
vulnerable in Italy," he added.
A bright spot in the PMI readings was France, where the
composite PMI climbed to a 15-month high. In Germany, however,
activity in the services sector disappointed, taking the composite
reading to a 16-month low.
Germany's DAX 30 index was down 0.3% at 10,643.39, while
France's CAC 40 index dropped 0.7% to 4,479.32.
The euro traded at $1.1204, down slightly from $1.1209 recorded
late Thursday in New York.
The U.K.'s FTSE 100 index was off 0.3%
(http://www.marketwatch.com/story/uk-stocks-pull-back-led-lower-by-drops-for-miners-2016-09-23)
at 6,890.93.
Movers: Shares of Sports Direct International PLC (SPD.LN)
jumped 7.6% on the FTSE 250 after the company said founder and
major shareholder Mike Ashley is taking over as chief executive
(http://www.marketwatch.com/story/sports-direct-shares-rally-as-founder-mike-ashley-takes-over-as-ceo-2016-09-23)
with immediate effect. The management change comes after the shock
resignation of longtime CEO Dave Forsey.
Leading decliners in Europe, Indivior PLC (INDV.LN) slumped 15%
after news that 35 U.S. states are now backing a lawsuit against
the British pharmaceutical company for allegedly anticompetitive
behavior.
RWE AG (RWE.XE) dropped 1.6% after the German utility company's
renewable energy unit Innogy SE said shares worth up to about EUR5
billion
(http://www.marketwatch.com/story/rwes-renewables-unit-eyes-56-billion-share-sale-2016-09-23)
($5.6 billion) will be offered in its initial public offering.
Commerzbank AG (CBK.XE) slipped 0.2%. The German lender is
eyeing at least 5,000 job cuts as part of a broader overhaul
(http://www.marketwatch.com/story/commerzbank-eyes-at-least-5000-job-cuts-sources-2016-09-23)
to address weak profitability in a world of low interest rates and
lackluster client activity, according to people familiar with the
plan.
On the sidelines: European Central Bank Vice President Vítor
Constâncio said at a conference in Frankfurt on Friday that the
policy makers are aware that low interest rates over a longer
period could threaten financial stability
(http://uk.reuters.com/article/uk-ecb-policy-constancio-idUKKCN11T0LX),
Reuters reported.
His comments follow a speech by ECB President Mario Draghi on
Thursday, who warned overcapacity in the banking sector is eroding
profits
(http://www.marketwatch.com/story/ecbs-draghi-warns-crowded-banking-sector-is-squashing-profits-2016-09-22).
Boris Johnson said Thursday he expects the U.K. to formally
begin its exit
(http://www.marketwatch.com/story/uk-aims-to-start-brexit-talks-in-early-2017-says-boris-johnson-2016-09-23)
from the European Union in the early months of next year, speaking
to Sky News. Britain's foreign minister also said he doesn't think
the U.K. government will need the full two-year window for the
Brexit negotiations.
(END) Dow Jones Newswires
September 23, 2016 05:52 ET (09:52 GMT)
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