European shares ended flat on Friday as surging COVID-19 cases compounded fears of the damage to the bloc’s economy in the coming winter months, although the benchmark index clocked its second straight week of gains.
The pan-European STOXX 600 edged 0.01 percent higher after jumping earlier this week on optimism about a working COVID-19 vaccine.
The index has gained 12.5 percent in the past two weeks, also buoyed by hopes of calmer global trade under US president-elect Joe Biden.
“Even if the greater likelihood of a vaccine has brightened prospects for next year, the near-term economic outlook is still very gloomy,” Capital Economics Ltd Europe economist Jessica Hinds said.
“Much of the eurozone is yet again subject to substantial restrictions on daily life that are taking their toll on economic activity, particularly in parts of the services sector,” Hinds said.
German Minister of Health Jens Spahn said it was too early to say whether restrictions imposed last week would need to be extended beyond this month, while French Prime Minister Jean Castex said there would be no easing for at least two weeks.
German shares rose 0.2 percent, while France’s CAC 40 index gained 0.3 percent after having risen to an eight-month high earlier this week.
Despite rallying more than 40 percent since a coronavirus-driven crash in March, the STOXX 600 is down about 7 percent this year on concerns that the second round of lockdowns would threaten a nascent economic recovery.
The S&P 500, in contrast, has risen 9.5 percent so far this year.
With the eurozone likely heading back into recession this quarter, the European Central Bank has already said it would provide more stimulus next month.
European banking stocks outperformed major sectors surged 16.5 percent this week, while travel stocks, which have lost 25 percent of their value so far this year, ended their second week higher.
Technology stocks, which have tracked a surge in their US peers as investors gravitate toward sectors that have seen higher demand in this year’s stay-at-home environment, gained 0.3 percent on Friday.
French power group EDF SA gained 0.4 percent as it showed signs of improving performance in the third quarter, while German property group Deutsche Wohnen AG fell 1 percent after its third-quarter earnings update.
Overall, quarterly results for STOXX 600 companies have been better than expected, with 68 percent of the firms that have reported results so far beating analysts’ earnings estimates, according to Refinitiv data.
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