European Stocks Drop to 10-Day Low on U.S. Economic Worries

(Bloomberg) -- European stocks slid in a broad retreat after minutes from the Federal Reserve’s last meeting and U.S. unemployment data stoked concern about the recovery in the world’s largest economy.

The Stoxx Europe 600 Index dropped 1.1% to a 10-day low at the close, with all but one of the 19 industry groups declining. Cyclicals such as miners, carmakers and banks were among the worst performers.

Stocks fell with U.S. jobless claims unexpectedly increasing over the last few weeks and Fed officials saying in July minutes that the coronavirus crisis would weigh heavily on economic activity in the near term. Simmering tensions between Washington and Beijing and an American stimulus impasse are also hindering European equities, which have stalled in recent weeks following a strong rebound from the selloff through March.

“We remain a bit skeptical of the European equity trade,” said Jack Janasiewicz, Natixis Investment Managers’ portfolio strategist. “Election concerns and fiscal infighting with Congress continues to make for an uncertain backdrop. In both cases however, a sharp return to more normal growth seems to be still some time away. This is certainly not a very supportive backdrop for a region heavily reliant on global growth.”

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