European stock markets on Friday rose after a volatile week in which company earnings and growth worries hit stocks, although the euro sank after weaker-than-expected business surveys from Germany and the eurozone.
Italian stocks led the bounce in equities, rallying hard after the country’s bond yields fell following a report saying that Italian Minister of European Affairs Paolo Savona is considering resigning over the government’s decision to challenge EU budget rules.
The pan-European STOXX 600 on Friday closed up 1.40 points, or 0.1 percent, at 353.98, but fell 1 percent from 357.71 on Nov. 16.
However, not all was cheerful in Europe — surveys of German and eurozone purchasing managers came in weaker than expected, pushing the euro to its lowest in three days and setting up the single currency for its worst week in a month.
The disappointing readings will likely be of concern to policymakers at the European Central Bank (ECB), who are expected to draw a line under their 2.6 trillion euro (US$2.95 trillion) asset purchase program at the end of the year.
“The key message from the PMI [purchasing managers’ index] data is that it has raised doubts about whether the economy will rebound after Q3 weakness, so there’s no wonder the news has been taken badly by the market,” Capital Economics Ltd senior European economist Jack Allen said in London.
“The big picture is that the data is not bad enough for the ECB to not end asset purchases at the end of the year, but if growth fails to rebound, they [ECB policymakers] will have to think twice about raising rates next year,” he said.
On Thursday, stock markets in Europe were hit by disappointing earnings, underscoring the lingering anxiety among equity investors due to trade tensions and slowing global investment and growth.
A draft deal between Britain and the EU on future relations reached on Thursday did little to lighten the mood.
UK shares on Friday ended in the red, as a deepening oil rout brought a tentative rally earlier in the day to a halt and investors moved to the sidelines before a key EU summit today.
Falling for a second straight week, the FTSE 100 ended the day down 7.46 points, 0.1 percent, at 6,952.86, with energy and mining sectors both down more than 3 percent. That was a 0.9 percent drop from a close of 7,013.88 on Nov. 16.
EU negotiators met to try to clear the last hurdle before a summit today that is due to endorse the British government’s Brexit deal, but the gathering ended without agreement after Spain’s 11th-hour objection over Gibraltar.
With the legal divorce treaty and an accompanying political declaration on future ties due to be rubber-stamped today, investors moved to the sidelines.
“With Sunday’s EU-UK Brexit summit back on after yesterday’s progress, any sound-bites on remaining resolutions, be it actual progress or hopes thereof, as well as threats or actual spanners in the works, could keep [the British pound] and thus the FTSE and its components on edge into the weekend,” Accendo Markets analyst Mike van Dulken said.
Mining stocks dropped to four-week lows, with Fresnillo PLC at the bottom of the FTSE 100 at two-and-a-half-year lows.
Software firm Sage Group PLC was up 2.9 percent, recovering from three-year lows hit earlier in the week following its results.
Homebuilders and banks also clawed back some ground lost in the past few weeks amid the Brexit turmoil — Persimmon PLC was up 2.5 percent and Lloyds Bank PLC rose 2.1 percent.
The big moves among the mid and small-cap companies were driven by mergers and acquisitions and earnings news.
Ibstock PLC jumped 8.3 percent to the top of the FTSE 250 after it sold its US brick business in a deal worth US$110 million.
The company said it would use the proceeds to repay debt.
Flybe shares took off after Sky News reported that Virgin Atlantic Airways Ltd is in talks to buy the UK-listed regional airline, one week after the company said it was in talks to sell itself.
The stock ended up more than 70 percent for a record daily gain, having lost almost half of its value this year as the company grapples with higher fuel costs, lower demand and a weak pound.
Interserve PLC sank 5.6 percent after the construction and services company warned debts would rise more than expected amid project delays and a weak building market.
Additional reporting by staff writer
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