Europe: Stocks slip at end of volatile week

[LONDON] European stock markets closed lower on Friday, extending previous sessions' losses as investors took stock at the end of a week of volatile trading.

London, Paris and Frankfurt all ended down, having abandoned early attempts at a modest rebound.

After an exhausting week dominated by intense speculation on the future of interest rates there was also much portfolio-shuffling at the end of the quarter.

ECB chief Mario Draghi this week hinted at a possible end to easy monetary policy in the eurozone in remarks that boosted the euro, created rate hike expectations and plunged equity investors into uncertainty, undermining stock valuations.

A strong currency hurts exporters, while higher interest rates raise corporate financing costs.

GRAPPLING WITH RALLIES

The pound rose on similar expectations for British monetary policy and bond yields rose across the continent.

"European equities have turned lower in late-day action possibly due to some quarter-end posturing with the markets continuing to grapple with the recent rallies in the euro and British pound and bond yields in the region," said analysts at the Charles Schwab brokerage.

Sentiment in the British capital was also clouded as official data confirmed the economy slowed to 0.2-per cent growth in the first quarter, as weak consumer spending started to bite.

Both Frankfurt and Paris had closed down almost two percent Thursday on concerns that central banks are preparing to scale back stimulus measures, such as record-low interest rates, in reaction to solid economic growth and high inflation.

The euro declined Friday but held above US$1.14, after talk of tighter ECB rates pushed the euro to more than one-year highs this week.

For years the greenback has benefited from a divergence between the Federal Reserve's move to higher rates - including hikes this year - and other regions. Rising interest rates make currencies more attractive because they offer a higher rate of return.

Elsewhere Friday, Asian equities kicked mostly into reverse after rallying the previous day, also on fears that an end to the era of cheap money was drawing near.

On the upside, Shanghai reversed early losses Friday to end up 0.1 per cent following data showing a forecast-beating jump in an index of Chinese manufacturing.

Wall Street, meanwhile, were stronger approaching midday in New York, led by a recovering tech sector and gains in Nike following solid earnings.

Tech giants including Apple, Microsoft and Google parent Alphabet scored modest gains after slumping on Thursday in a sell-off that hit Nasdaq especially hard.

AFP