EUROPE MARKETS: European Stocks Drop For Second Day As Euro Rises After Inflation Data

By Sara Sjolin and Carla Mozee, MarketWatch Features Dow Jones Newswires

UBS jumps after earnings

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European stocks posted mild losses Friday, with investors pushing up both the euro and the pound against the dollar following top-tier economic data for the eurozone and the U.K.

The Stoxx Europe 600 index fell 0.2% to close at 387.09, logging a second straight day in negative territory. The benchmark on Thursday broke a six-session win streak (http://www.marketwatch.com/story/european-stocks-snap-winning-streak-with-ebc-on-deck-2017-04-27) after the European Central Bank offered no surprises at its policy meeting, while a drop for Deutsche Bank AG (DBK.XE) (DBK.XE) also weighed.

Most European stock markets are closed for trade on Monday for May Day and the U.K.'s early May bank holiday. Only the Danish market is open for trade, according to index provider Stoxx (https://www.stoxx.com/document/Resources/Methodology/Dissemination/Realtime_Data/dissemination_calendar_2017.pdf).

Euro, pound advance: The euro pushed to an intraday high of $1.0949 after the preliminary eurozone inflation report for April, with investors eyeing the prospect that stronger inflation may compel the European Central Bank to raise interest rates. The shared currency bought $1.0874 late Thursday in New York.

Core inflation excluding energy and food rose to 1.2% in April, according to Eurostat. That's the highest since March 2013, FactSet data showed, and surpassed the consensus estimate of 1%. Headline inflation rose to 1.9%, above the 1.8% estimate.

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ECB President Mario Draghi in his press conference on Thursday said there was still no "convincing upward trend" in underlying inflation in the eurozone, reiterating that it's too soon to scale back the bank's aggressive stimulus program. The ECB has an inflation target of near but just below 2%.

Read:ECB live blog recap: Mario Draghi sees diminished downside economic risks (http://blogs.marketwatch.com/thetell/2017/04/27/ecb-live-blog-mario-draghi-expected-to-avoid-taper-talk/)

Meanwhile, the pound bought $1.2943, remaining above $1.29 even after British economic growth slowed more than expected in the first quarter. A preliminary reading of 0.3% growth was less than the FactSet consensus estimate 0.4%, as services-sector activity slowed considerably.

Shares of multinational companies can be hurt by strengthening in the euro and the pound as they would hurt prospect for higher sales and earnings made overseas.

The U.K.'s FTSE 100 index ended down 0.5% at 7,203.94 (http://www.marketwatch.com/story/ftse-100-falls-as-barclays-drops-pound-rises-ahead-of-gdp-data-2017-04-28).

French inflation data out earlier on Friday came in at 1.4% (http://www.marketwatch.com/story/french-inflation-rises-01-misses-expectations-2017-04-28), in line with forecasts.

In other economic news, German retail sales rose 0.1% in March (http://www.marketwatch.com/story/german-retail-sales-nudge-higher-in-march-2017-04-28)on the month, beating forecasts of a flat reading.

France's CAC 40 index closed Friday 0.1% lower at 5,267.33, while Germany's DAX 30 index fell 0.1% to 12,438.01.

Italy's FTSE MIB rose 0.1% to 20,609.16. On Sunday, Italy's governing center-left Democratic Party will hold a leadership primary. Several polls indicate Matteo Renzi, Italy's former prime minister, is likely to win the majority of votes.

Meanwhile, in the U.S., the first-quarter GDP reading came in weaker than expected at 0.7% growth (http://www.marketwatch.com/story/us-economy-posts-slowest-growth-in-three-years-first-quarter-gdp-shows-2017-04-28).

Weekly win: The pan-European benchmark ended 2.4% higher for the week, posting its best weekly gain since December. The strong performance came following a strong rally at the start of week after centrist Emmanuel Macron came out on top in the first round of the French presidential election. Macron is expected to win the runoff round against far-right Marine Le Pen on May 7, easing fears of a so-called Frexit.

For April, the benchmark climbed 1.6%.

Movers: Shares of UBS Group AG (UBS) rose 2.1% after the Swiss banking giant reported earnings well ahead of forecasts (http://www.marketwatch.com/story/ubs-beats-forecasts-as-income-growth-strong-2017-04-28)due to strong income growth in its investment-banking and wealth-management units.

On a more downbeat note in the banking space, shares of Barclays PLC (BCS) (BCS) slid 5.2% after the U.K. lender said its net profit fell by more than half in the first quarter of the year. (http://www.marketwatch.com/story/barclays-profit-slides-on-write-down-shares-fall-2017-04-28)

Electrolux AB shares (ELUXY) rose 0.7% after the Swedish household-appliance maker posted better-than-expected earnings of 1.08 billion Swedish kronor (http://www.marketwatch.com/story/electrolux-shares-leap-after-earnings-beat-views-2017-04-28)($122.3 million) for the first quarter on improving trend across all of its businesses while accelerating cost savings.

(END) Dow Jones Newswires

April 28, 2017 12:16 ET (16:16 GMT)