European stocks declined for a fifth straight week, the longest losing streak since July 2008, as US jobs and manufacturing data that missed forecasts fueled concern the recovery in the world’s largest economy may falter.
Rio Tinto Group and BHP Billiton Ltd led raw-material shares to the largest drop among 19 industry groups in the STOXX Europe 600 Index, as the US jobless rate unexpectedly rose and a gauge of Chinese manufacturing expanded at the slowest pace in nine months. Nokia Oyj slumped the most in 10 years after the Finnish maker of mobile phones cut its forecasts for the devices and services unit.
The STOXX 600 lost 1.9 percent to 273.67 this week, the biggest drop since March 18. The benchmark gauge for European equities has retreated 3.6 percent over the past five weeks amid speculation Greece may default on its debt payments and increasing concern that global growth may slow.
“The US jobs reading is a bit of a shock to the system,” said Joshua Raymond, a market strategist at City Index Ltd in London. “The recent data coming out of the US paints the picture of a sharp slowdown in activity this quarter.”
The UK’s FTSE 100 declined 1.4 percent, Germany’s DAX slipped 0.8 percent and France’s CAC 40 fell 1.5 percent, the biggest drop in seven weeks. Greece’s ASE Index rallied 5.4 percent amid speculation European officials will sanction additional financial assistance for the indebted nation.
The STOXX 600 has slipped 0.8 percent this year.
The European Central Bank (ECB) is likely to raise interest rates next month even as Greece’s worsening debt crisis clouds the economic outlook in the run-up to next week’s policy meeting.
All 51 economists forecast the ECB will keep the benchmark rate at 1.25 percent at the meeting on Thursday next week. The central bank led by Jean-Claude Trichet may increase borrowing costs by 25 basis points next month, a survey showed.
A measure of basic-resource stocks in the STOXX 600 tumbled 4.9 percent this week, the most in almost three months, as China’s manufacturing growth eased. The Purchasing Managers’ Index dropped to 52 last month from 52.9 in April, the China Federation of Logistics and Purchasing said. A gauge of manufacturing in the 17-nation eurozone slipped to 54.6 last month from 58 in April, London-based Markit Economics said. A reading of more than 50 indicates growth.
Greek banks were among the biggest gainers this week as the EU, ECB and IMF concluded talks with the Mediterranean country’s government. National Bank of Greece SA soared 16 percent, the most since 2008, and EFG Eurobank Ergasias rallied 12 percent.
EU and IMF officials agreed to pay the next installment to Greece under last year’s 110 billion euro (US$161 billion) bailout, paving the way for an upgraded aid package that includes a “voluntary” role for investors, Luxembourg Prime Minister Jean-Claude Juncker said on Friday.
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