German and French stocks dragged European shares to their biggest decline in a month amid investor concern Greece would not reach an agreement with creditors in time for a debt repayment.
The STOXX Europe 600 Index tumbled 1.7 percent to 399.87 at the close of trading on Friday, trimming its monthly advance to 1 percent.
Benchmark gauges of French and German stocks fell at least 2.3 percent, as automakers led declines among industry groups. Greece’s ASE Index slid 1.4 percent.
“The declines today [Friday] are broad-based, which suggests it’s also some end-of-month rotations,” said Espen Furnes, who helps oversee US$85 billion at Storebrand Asset Management in Oslo.
COMMITMENT
“As long as Greece is in the news, it will be a concern, although the real economic implications for the rest of Europe are negligible,” Furnes said.
Greece is under pressure to make stronger commitments to overhaul its economy and strengthen public finances before any further funds are released. It has not yet said how it will make almost 1.6 billion euros (US$1.75 billion) in IMF payments scheduled for next month, with the first transfer due on June 5.
In the US, Department of Commerce data showed the world’s largest economy contracted in the first quarter. GDP shrank at an annualized rate of 0.7 percent, revised from a previously reported 0.2 percent gain, as a harsh winter, a strong US dollar and delays at ports took their toll.
Economists had forecast a 0.9 percent decline. A separate report showed consumer confidence fell to a six-month low this month.
“Obviously, the numbers out of the US were not good,” Furnes said. “The market’s a bit more vulnerable now as volatility is increasing.”
DOWNTREND
The STOXX 600 fell for a fifth time in six days, for a 1.9 percent weekly decline. The index is down 3.4 percent since a record last month, having swung between weekly gains and losses since the middle of last month.
Daimler AG, Volkswagen AG and BMW AG slid at least 2.3 percent, dragging a gauge of carmakers down for a second day. ArcelorMittal SA and Rio Tinto Group contributed the most to a decline in commodity producers.
Syngenta AG climbed 0.5 percent, paring gains of as much as 2.7 percent. The agrochemical maker that rejected an unsolicited US$45 billion takeover offer from Monsanto Co is preparing for a possible higher bid from its US rival, according to people with knowledge of the situation.
Swiss stocks also fell after data showed first-quarter GDP shrank the most in six years as the strong franc hurt exports. The SMI Index retreated 1.7 percent, with Richemont and Givaudan SA posting the biggest declines.
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