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UK quarantine moves, data knock European stocks lower

[BENGALURU] European shares slid in thin summer trading on Friday as travel stocks slumped after Britain added more countries to its quarantine list, while weak data from across the globe raised doubts over the pace of economic recovery from the coronavirus crisis.

The pan-European Stoxx 600 index fell 1.2 per cent, with travel and leisure stocks down 2.3 per cent to lead sectoral losses.

UK-based airlines and tour operators TUI, Easyjet, British Airways-owner IAG fell between 4.8 per cent and 8.4 per cent after the British government said it would impose a 14-day quarantine on arrivals from France, beginning on Saturday.

It also added the Netherlands, Malta and three other countries to the list.

France, the second-most popular overseas destination after Spain for Britons, warned that it would reciprocate. Paris-listed shares fell 1.6 per cent, with Air France KLM dropping 5.8 per cent.

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"What we have got is a significant amount of uncertainty over the evolution of coronavirus pandemic, which is maintaining a risk premium for the transportation, leisure and hospitality sectors," said Alastair George, head strategist at Edison Investment Research.

Global stock markets also headed lower after lacklustre retail sales numbers from the US and China, while data confirmed that the euro zone suffered the biggest drop ever recorded in employment and gross domestic product in the second quarter.

Worries over upcoming US-China trade talks amid souring diplomatic relations between the two countries and a lack of progress in negotiations over US economic stimulus, a major factor that has pushed US stocks near all-time highs, also weighed on the mood.

Despite Friday's pullback, the Stoxx 600 recorded its second straight week of gains as huge quantities of stimulus coursing through the financial system and optimism over the development of a Covid-19 vaccine made investors buyers of equities.

"We do believe there's value in European equities," said Matthias Scheiber, global head of multi asset portfolio management at Wells Fargo Asset Management.

"It will be a long road to full employment and we will see job losses. However, Europe has managed reasonably well with various fiscal and monetary schemes."

Among individual movers, German container shipping line Hapag-Lloyd surged 13.3 per cent as it nearly doubled net profit in the first half of 2020 and kept its full-year outlook intact.

Rovio Entertainment, the maker of the 10-year-old "Angry Birds" mobile game series, rose 1.6 per cent after reporting a 160 per cent jump in second-quarter adjusted operating profit, helped by increased player engagement amid Covid-19 lockdowns.


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