European stocks on Friday gave up gains they had held for most of the session in the final hour of trading, as a resurgence in COVID-19 cases in the US halted progress on reopening parts of the economy.
The STOXX 600 dropped 0.4 percent at the close, tracking US equities lower as the Texas governor took measures, such as ordering bars to close, while Florida reported a record number of new cases.
Banks and telecoms tumbled, while tech and real-estate shares outperformed.
Investor sentiment continues to balance economic stimulus measures against the rising levels of fresh coronavirus cases as the US recorded its biggest-ever jump in infections.
Although the STOXX 600 is on track to post a third monthly gain, the pace of the rise has been dented by its 2 percent drop this week.
“The dangers remain the months of August and September, as from a seasonal perspective, these tend to be the worst months of the year for equities,” said Edmund Shing, head of equity derivatives strategy at BNP Paribas SA.
Among notable movers, Wirecard AG’s free fall continued with a 64 percent drop.
Investors are also awaiting the second-quarter results season for further direction and clues on the financial impact of the virus.
“Equity markets remain supported both by the political and liquidity cycle, pushing also the economic and therefore earnings cycle ahead,” Merck Finck & Co chief strategist Robert Greil said. “Stock markets, while remaining volatile, look well-supported from here.”
Markets this week have swung between fears of a second wave of coronavirus cases, particularly in the US, and optimism over improving economic data in Europe as many countries relax lockdown measures.
“The volatility levels are still elevated. We’ll have these 1 percent moves on a regular basis throughout the summer,” Tavira Securities Ltd sales trader Keith Temperton said. “As the liquidity dries up, the volatility will increase.”
In London, shares outperformed its European peers as the British government took more steps to relax the coronavirus-led lockdown.
Airline stocks were in a bright spot, with British Airways-owner IAG rising 1.7 percent on news that the UK is working on an a plan to relax its quarantine for international travelers from some countries.
Air France-KLM rose in intraday trading after France and the Netherlands reached a deal on an aid package for the airline group, with the latter saying it would provide a 3.4 billion euro (US$3.81 billion) financing package.
However, the stock later reverted its gains to close down 3.4 percent.
AMS AG fell 1.7 percent after the Austria-based semiconductor company rejected media allegations of market manipulation during its takeover of Osram.
Adidas AG slipped 2.1 percent after Nike Inc reported an unexpected quarterly loss.
Sweden’s Hennes & Mauritz AB fell 5.5 percent after the world’s second-biggest fashion retailer saw the pandemic pummel it to a slightly deeper-than-expected loss in the second quarter.
Additional reporting by staff writer
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