Retailers led a fourth day of declines in European shares in a holiday-shortened week.
Next PLC led retail shares to the worst performance among STOXX Europe 600 Index groups, down 15 percent after cutting its annual sales-growth forecast. Marks & Spencer Group PLC and Associated British Foods PLC, owner of clothing chain Primark, slid 4.9 percent or more.
Volkswagen AG dropped 2 percent after it failed to reach an agreement with US authorities over its tainted diesel engines.
Europe’s benchmark dropped 1.5 percent at the close of trading on Thursday. The volume of shares changing hands was one-third of a percentage point lower than the 30-day average. Markets were closed on Friday for the Good Friday holiday, with some including Norway and Denmark shut on Thursday as well.
The STOXX Europe 600 capped its longest losing streak in six weeks as investors awaited the European earnings season and speculated on the pace of US Federal Reserve rate hikes. It has not posted back-to-back gains since it reached a two-month high on March 14, signaling a loss of momentum for the rally that more than halved its decline this year.
“It might make sense to take some chips off the table after you have made decent money, given the rally we have seen in the last six weeks,” said Pierre Mouton, who helps oversee about US$9 billion at Notz, Stucki & Cie in Geneva. “We also have the earnings season coming up and it could be disappointing so investors are thinking it’s better to book profits now.”
Analysts have slashed their estimates for European corporate earnings this year. They are now projecting a profit decline of 0.9 percent for STOXX 600 firms, compared with an increase of 5.7 percent at the start of the year.
The STOXX 600 fell 1.9 percent this week for a second consecutive decline, trimming its first monthly advance since November last year.
It rebounded as much as 14 percent since a Feb. 11 low amid optimism about central-bank policies.
Lenders, the worst performers this year, declined to a one-month low.
Banco Popolare SC slipped 4.8 percent after agreeing to buy Banca Popolare di Milano Scarl, which slid 5.4 percent.
Standard Chartered PLC tumbled 7.8 percent after peer Australia & New Zealand Banking Group Ltd warned of higher bad-debt provisions because of low commodity prices.
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