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Europe: Stocks decline after US retail sales as miners slide

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[FRANKFURT] European stocks fell after retail data in the US missed economist forecasts, triggering concerns about the strength of the economy.

Commodity producers and automakers dragged the Stoxx Europe 600 Index down 0.2 per cent at the close, after it traded little changed for most of the day.

Sales at US retailers stalled in July, while economists expected a 0.4 per cent increase. The equity index, which erased its post-Brexit slump on Thursday, trimmed its weekly gain to 1.4 per cent, with the volume of shares changing hands today about 39 per cent lower than the 30-day average.

"US retail sales were disappointing, causing some concern about the strength of the economy," said Samy Chaar, a Geneva-based strategist at Lombard Odier, which manages about US$170 billion.

"European stocks should recover because when you dig into the numbers, US consumption remains relatively robust and the European economy is muddling through."

Better-than-forecast financial results from companies including Zurich Insurance Group AG and KBC Group NV yesterday helped push the measure to its highest level since May, finally recovering its pre-Brexit level seven weeks after the UK referendum.

At the same time, economic figures for the region have topped projections in recent weeks. Data today showed gross domestic product grew 0.3 per cent in the second quarter, as forecast, with the German economy expanding 0.4 per cent, twice as fast as estimated.

Still, skepticism about the efficacy of central-bank stimulus has sent the Stoxx 600 down 5.4 per cent in 2016, and investors are underweight on the region's shares for the first time in three years, according to a Bank of America Merrill Lynch survey last month.

The recent bounce has pushed the index's valuation to 15.2 times estimated profits, near this year's high.

Among stocks moving on corporate news, AP Moeller Maersk A/S rose 3.1 per cent after Denmark's biggest company said it increased operational efficiency as it reported that earnings before interest and tax came in at a higher-than-estimated US$656 million.

Tullow Oil Plc advanced 4.2 per cent after Bank of America upgraded its recommendation on the explorer to buy from neutral.