European stocks fell on Friday, as worries about troubled property developer China Evergrande Group (恆大集團) and weak German business confidence data prompted investors to book some profits after a mid-week rally.
European sportswear makers Adidas AG, Puma SE and JD Sports Fashion PLC fell about 3 percent each after US rival Nike Inc cut its fiscal 2022 sales expectations and predicted delays during the holiday shopping season due to a supply chain crunch.
Retail stocks were the top decliners in Europe, down 1.7 percent, while the region-wide STOXX 600 fell 0.9 percent to 463.29, but a three-day rally put the index 0.31 percent higher for the week.
“Equities have rallied to take a pause early this morning faced with the likely default of Evergrande,” Nordea Asset Management senior macro strategist Sebastien Galy said.
Meanwhile, a survey by Ifo Institute showed German business morale this month fell for a third straight month, hit by supply chain woes that are causing a “bottleneck recession” for manufacturers in Europe’s largest economy.
Germany’s DAX fell 0.72 percent to 15,531.75, up 0.27 percent from a week earlier, heading into the weekend when the country votes to elect German Chancellor Angela Merkel’s successor.
“Some of the hesitancy in European markets could also be put down to the German elections, which promise to be the most interesting in some time,” IG chief market analyst Chris Beauchamp said.
“Markets are facing a change of direction in Germany unlike anything seen in the past decade or more, and the end of Merkel’s tenure promises to be a watershed moment for the EU and global investors alike,” Beauchamp added.
The benchmark STOXX 600 is on course to end the month in the red after seven consecutive months of gains, as rising energy prices and supply-chain bottlenecks fed into fears of inflation, while major central banks plan to cut COVID-19 stimulus.
However, European Central Bank President Christine Lagarde said in an interview aired on CNBC that many of the drivers of a recent spike in eurozone inflation are temporary and could fade in the next year.
London’s FTSE 100 ended lower as concerns about a slowdown in global economic growth outweighed gains in healthcare and energy stocks.
It eased 0.38 percent to 7,051.48, but posted a weekly increase of 1.26 percent, snapping a three-week losing streak.
Retailers, industrial miners and life insurers were the top losers.
The FTSE 100 has gained nearly 9.5 percent so far this year on higher energy prices and accommodative central bank policies.
However, it has significantly underperformed a 17 percent rise among its European peers.
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