Europe: Faltering PMIs add to a lacklustre week for stocks

[BENGALURU] Downbeat economic data that pointed to a stalling of the euro zone recovery hit regional stock markets on Friday, with the pan-European Stoxx 600 index marking weekly losses as coronavirus cases rose across the continent.

The German DAX reversed early gains to trade 0.5 per cent lower after Purchasing Managers Index (PMI) surveys showed service sector activity unexpectedly came to a near standstill in August, although factory activity rebounded further.

Paris-listed shares fell 0.3 per cent after a worse showing from the French survey, while euro zone blue chips were down 0.4 per cent.

The opening gains proved short-lived, with the wider Stoxx 600 index falling 0.2 per cent, but firmer trading on Wall Street on the back of better data helped limit losses into the close.

"Today's euro zone PMI release confirms that while activity is on the mend, the pace of the recovery is slowing," Jai Malhi, a global market strategist at JP Morgan Asset Management wrote. "It's no coincidence that the recovery is losing pace as concerns over new (coronavirus) infections have risen."

The Stoxx 600 recorded a 0.9 per cent loss for the week, with growth-linked cyclical sectors such as banks, oil and gas firms and automakers hit hard as several European countries saw a resurgence in coronavirus cases that raised fears of more restrictions on business activity.

London's exporter-heavy FTSE 100 slipped only 0.2 per cent, supported by a slump in the pound on a mix of bad news on the latest Brexit negotiations and gains for the US dollar.

Travel and leisure stocks were the biggest sectoral gainers, up 3.1 per cent, with France's Accor and British rival InterContinental Hotels (IHG) surging for a second day on reports of a possible merger.

Irish building and insulation materials firm Kingspan jumped 8.9 per cent after its chief executive said the company saw significant pent-up demand post-lockdown.

Swiss drugmaker Novartis rose 0.5 per cent after it won US health regulator's approval to repurpose an 11-year-old blood cancer drug against multiple sclerosis.

Dutch-based payment-processing company Adyen fell 3.7 per cent as several top executives each sold 15 per cent of their stakes in the company, cashing in 693 million euros (S$1.12 billion) in all.

REUTERS