European stocks fell on Friday on nervousness around the Omicron variant of SARS-CoV-2, while the US inflation reading coming in broadly in line with expectations did little to allay uncertainty around US monetary policy.
The pan-European STOXX 600 slipped 0.3 percent, down for third straight session on worries that measures to curb the spread of the Omicron variant could hit economic recovery.
However, a strong two-day gain at the beginning of the week saw the index post the best weekly gain since March, up 2.8 percent.
Data on Friday showed that US annual consumer prices rose further to 6.8 percent — the biggest year-on-year rise since June 1982 and followed a 6.2 percent advance in October.
“It looks to be a subdued end to the week ... as stocks pause for breath following the big gains in the first half of the week,” said Chris Beauchamp, chief market analyst at IG.
“US CPI [consumer price index] came in line with expectations, but prices continue to rise, meaning that while the pressure on the Fed to raise rates hasn’t increased much as a result of today’s data, it doesn’t really lessen it either,” he said.
On the contrary, news that the European Central Bank is widely considering a temporary increase to its bond purchase plan at a policy meeting next week was seen as a dovish step.
Technology and retail were the top decliners in Europe on Friday.
“We think the path for equities is lower over the next 12 months,” said Milla Savova, European equity strategist at Bank of America. “Real bond yields will come up from record lows as the Fed turns more hawkish and the market starts to price in a sharper-than-expected Fed hiking cycle.”
Auto stocks were led higher by Daimler AG, which rose 2.9 percent after spun-off Daimler Truck climbed in its market debut on the Frankfurt Stock Exchange.
Gains for the sector came even as data showed that China’s auto sales dropped 9.1 percent last month, marking their seventh consecutive monthly fall, as a prolonged global shortage of semiconductors disrupted production.
Tobacco group Swedish Match AB jumped 7.2 percent after the Wall Street Journal reported that US Democrats dropped a proposed vaping tax that would have taxed e-cigarettes like regular ones.
Food delivery companies Deliveroo Holdings PLC and Just Eat Takeaway.com NV slipped 2.4 percent and 3.2 percent respectively, adding to losses in the past week on worries that a European Commission ruling on gig economy drivers would hurt profits.
Polish fashion retailer LPP Spolka Akcyjna jumped 10.2 percent to hit a fresh record high, extending Thursday’s rally after strong third-quarter results.
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