European Stocks Decline as Growth Concerns Return to the Fore

(Bloomberg) -- European stocks declined from a five-week high amid concerns about the pace of global economic recovery.

The Stoxx Europe 600 Index retreated 0.5% by the close in London, with such economically sensitive sectors as travel and household goods leading the drop. Mining stocks also underperformed, as tepid Chinese retail data and signs of a new outbreak in Hong Kong cast doubts on the pace of Asia’s demand recovery. Technology stocks also retreated as investors shifted out of the best-performing sector since the March recovery began.

Buoyed by encouraging results in a U.S. vaccine study and several large companies’ guidance upgrades, European equities on Wednesday surged to their highest since early June. However, today investors fled risk assets after U.S. initial jobless claims signaled slowing labor-market recovery.

After surging on Wednesday, AstraZeneca Plc slumped 1.7% on Thursday as the U.K. pharma company remained quiet after British media reports said results of phase 1 tests to be published in The Lancet medical journal were promising.

The European Central Bank kept its emergency monetary stimulus program unchanged today. Despite the powerful support measures, the outlook remains fragile and much depends on whether European Union leaders can settle their differences over their groundbreaking 750 billion-euro ($857 billion) recovery fund when they meet in Brussels on Friday.

Recent index trends are set to continue until there is a real change of direction, such as agreement on a joint fiscal response at the EU summit, Oddo & Cie Head of Strategy Sylvain Goyon said by phone. Such a deal would mean a step-change both in European fiscal policy and in the U.S.-European stock market divide.

Compagnie Financiere Richemont SA tumbled 4.6% after reporting a slump in first-quarter sales as virus lockdowns around the world weighed on demand.

Ceconomy AG rose 13% after the retailer raised its full-year guidance on Thursday, and machinery maker Sandvik AB plunged 5.9% after forecasting a slow recovery. Health care suppliers Sartorius AG and Getinge AB -- both outperformers throughout the virus crisis -- rose after Sartorius boosted its outlook and Getinge’s results beat expectations.

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