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European stocks hit one-week low on virus worries

European stocks hit one-week low on virus worries
European stocks hit one-week low on virus worries   -   Copyright  Thomson Reuters 2021
By Reuters

– European stocks fell to their lowest in a week on Tuesday as a spike in COVID-19 cases in Asia and elsewhere raised fears of a slowdown in global economic growth.

The pan-European STOXX 600 shed 0.3%, falling for a second straight session after the index marked its longest winning streak in over a decade.

Tighter scrutiny of China’s internet sector, nationwide lockdown in New Zealand and movement restrictions in several Asian countries kept investors on edge even as European economies continued to recover from pandemic lows.

“As much as concerns around the Delta variant are complicating the growth outlook, especially in some Asian economies, global growth momentum has already started to decline since mid-Q2,” analysts at HSBC wrote in a morning note.

Dutch tech firm Prosus, which has a stake in Chinese tech giant Tencent, fell 3.5% and was the top drag on STOXX 600.

Economically sensitive sectors such as oil and gas, travel and leisure, automakers and banks led the decline in morning trades.

A rally in the hard-hit cyclical stocks helped European shares hit all-time highs last week as expectations of a record jump in European corporate profit and optimism around the pace of vaccinations underpinned the continent’s economic recovery prospects.

However, a monthly survey of fund managers by Bank of America showed only less than half of the respondents now expect the European economy to further improve over the next 12 months – the lowest proportion since last June.

Investors took little comfort from data showing the number of employees on British company payrolls moved closer to pre-pandemic levels in July and pay growth hit a record high, albeit distorted by the effects of lockdowns.

Early reading of the euro zone’s second-quarter GDP growth and U.S. retail sales figures are due later in the day.

UK-listed shares of BHP Group jumped 6.7% after the world’s biggest miner posted its best annual profit in nearly a decade and said it would pay a record dividend.

Online trading platform Plus500 climbed 6.1% as it forecast annual revenue to be “significantly ahead” of analysts’ estimates.