European shares fell on Friday as investors remained wary of the economic effects of the COVID-19 outbreak on the bloc, despite data showing a faster-than-expected pickup in business activity this month.
The pan-European STOXX 600 fell 0.5 percent and ended slightly lower for the week as China reported an uptick in new cases.
The index had scaled record highs earlier in the week as data signaled a slight slowdown in the outbreak, lending weight to forecasts that the crisis might blow over by April.
The outbreak has killed more than 2,000 people and upended industrial activity in China, causing disruptions for several European manufacturers that supply and source products from one of the EU’s largest trading partners.
On Friday, IHS Markit’s eurozone flash composite purchasing manufacturers’ index (PMI) showed business activity expanding at a better-than-expected pace, although expansion remained slow.
Investors would now look to the final reading due early next month.
“The news [about the virus] has not been too positive, but nothing has indicated that we are falling into a catastrophic scenario yet as far as markets are concerned,” said Hubert de Barochez, markets economist at Capital Economics Ltd in London. “The PMIs are encouraging that we’re not heading into recession at least, but we still see consistently slow growth.”
German stocks recovered slightly from initial losses after preliminary IHS data showed that the country’s business activity was slightly better than expected this month.
Commodity-linked EU sub-indices, such as basic resources and oil and gas stocks, were among the worst performing sectors, shedding about 1 percent each.
Among individual movers, British luxury brand Burberry Group PLC fell 3 percent after Jefferies Group LLC cut the stock’s price target, saying that it was one of the most exposed brands to the outbreak.
Swiss construction chemicals maker Sika AG dropped 2.5 percent after it posted a weaker-than-expected annual operating profit.
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