Markets

European Stocks Close Lower as Investors Reacted to Earnings, Data; Travel Stocks Down 2.5%

Toby Melville | Reuters
  • The pan-European Stoxx 600 index provisionally ended down 0.4%, with most major bourses and sectors in negative territory.
  • Travel and leisure stocks dropped 2.5% to lead losses while chemicals stocks climbed 1%.
  • On the data front, the euro zone economy posted a sharper rebound than expected in the second quarter to grow by a quarterly 2%, according to EU statistics office Eurostat.

LONDON — European stocks retreated on Friday after closing the previous session at all-time highs, as investors reacted to another deluge of corporate earnings and economic data.

The pan-European Stoxx 600 index provisionally ended down 0.4%, with most major bourses and sectors in negative territory. Travel and leisure stocks dropped 2.5% to lead losses while chemicals stocks climbed 1%.

Shares in Asia-Pacific declined again on Friday, heading for their worst month since March 2020, as volatile trading continued for Chinese tech stocks amid regulatory actions in China and Hong Kong's Hang Seng index tumbled.

Stateside, stock futures fell amid a slide in Amazon shares, but the S&P 500 is still on track to notch its sixth straight positive month.

The rapid spread of the delta Covid-19 variant and the regulatory measures in China continued to weigh on sentiment in Europe, but European shares were still on course for a sixth consecutive month of gains.

Earnings in focus

Earnings continued to take center stage with BNP Paribas, Renault, Air France-KLM and IAG among the big names reporting Friday.

BNP Paribas reported a 26% annual rise in net profit for the second quarter to 2.9 billion euros ($3.44 billion), exceeding market expectations on the back of a rebound in business activity. The French lender's shares slid 1.2%.

Renault posted a quarterly net profit of 354 million euros for the first half of the year, up from a substantial loss of nearly 7.3 billion euros for the same period last year as the pandemic shut down production across the industry. The French automaker forecast a full-year profit in 2021 despite the challenges caused by the global semiconductor shortage. Renault stock fell 3%, however.

L'Oréal on Thursday reported an acceleration in second-quarter sales growth in part due to a surge in U.S. makeup sales as lockdowns eased. Shares gained 0.3%.

At the top of the Stoxx 600, Euronext gained 5.3% after earnings reports. Italy's UniCredit climbed 3.1% after a strong second-quarter profit beat.

Toward the bottom of the index, British quality assurance firm Intertek plunged 8% after its first-half results.

On the data front, the euro zone economy posted a sharper rebound than expected in the second quarter to grow by a quarterly 2%, according to EU statistics office Eurostat.

Euro zone inflation climbed to 2.2% in July, its highest rate since October 2018 and above the European Central Bank's 2% target. However, ECB policymakers have indicated that they expect temporary overshoots.

German annual consumer price inflation spiked to 3.1% in July, its highest since August 2008, prompting a leading services sector trade union to call for immediate and substantial wage increases.

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