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STOXX 600 falls 0.2%, logs weekly gains of 1.4%
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Energy, tech stocks lead declines
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Mercedes-Benz up on earnings boost
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Sika rises as guidance beats expectations
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NatWest outlook sends shares tumbling
(Updates to market close)
By Shreyashi Sanyal and Amruta Khandekar
Feb 17 (Reuters) - European shares on Friday retreated
further from one-year highs touched earlier in the week as
energy and technology stocks spearheaded losses on mounting
concerns that the Federal Reserve would stick to its monetary
tightening trajectory for longer.
The pan-European STOXX 600 index closed down 0.2%,
after having touched its highest level in a year in the previous
session on a boost from French blue-chip shares.
Recent data from the United States, including a
hotter-than-expected January producer prices report, have added
to a growing pile of evidence that the Federal Reserve's
aggressive rate hikes have not yet cooled the economy to the
central bank's satisfaction.
Goldman Sachs and Bank of America said they expect the U.S. Federal Reserve to raise interest rates three more times this year by a quarter percentage point each, given persistent inflation. "Markets are trying to work out what to do because now it looks like they (the Fed) are going to have to raise interest rates higher than previously expected," said Giles Coghlan, chief market analyst at HYCM.
Energy firms fell 1.9% to spearhead declines on the STOXX 600 as crude prices dropped on concerns of more U.S. rate hikes weighing on demand. Rate-sensitive technology shares , followed suit with declines of 1.7%. Limiting losses on the STOXX 600, were shares of 'defensive' firms, with the healthcare , utilities and telecom subindexes rising between 0.6% and 0.8%. France's CAC 40 index fell 0.3%, but hovered near record high levels hit in the previous session while Germany's DAX index shed 0.3%.
German producer prices
rose more than expected in January, though the rate of
increase eased for the fourth month in a row, data showed on
Friday.
Still, the broader STOXX 600 logged weekly gains of 1.4% on a boost from upbeat earnings, improving eurozone economic outlook, with certain consumer discretionary stocks, including big luxury names benefiting from the reopening in China.
The European Central Bank interest rates are likely to reach
their peak over the summer and a rate cut this year is out of
the question, French ECB policymaker Francois Villeroy de Galhau
said on Friday.
Mercedes-Benz Group rose 2.8%, after beating
analysts' estimate for quarterly earnings, though the premium
car maker warned of lower earnings this year amid economic
uncertainty.
Shares of Sika AG gained 4.9% after the Swiss
chemicals company's 2023 guidance beat analysts' expectations.
UK lender NatWest shares sank 6.9% after the bank
warned that rising interest rates might not deliver the
long-lasting earnings investors hoped for.
(Reporting by Shreyashi Sanyal and Amruta Khandekar in
Bengaluru; Editing by Sherry Jacob-Phillips, Dhanya Ann Thoppil
and Diane Craft)
