European Stocks Deepen Weekly Drop as Banks Slump to Record Low

(Bloomberg) -- European equities fell, posting their worst weekly decline since mid-June, on mounting concern the rise in coronavirus cases will hamper the region’s economic recovery. Banks slid to a record low.

The Stoxx Europe 600 index closed down 0.1% on Friday. The Stoxx 600 Banks Index fell for a seventh straight day, closing at the lowest level since its creation in 1991, hit by concerns over coronavirus-related lockdowns, low interest rates and bad loans.

Europe’s main benchmark is down 3.6% this week as countries including the U.K. and France tighten their virus rules and former hotspots like the Spanish capital of Madrid see rising hospitalizations.

In the U.S., House Democrats have started drafting a stimulus proposal of roughly $2.4 trillion, just as economists were expressing doubts over whether additional funding would be seen this year.

“We think it makes sense to stay positioned for continued recovery and further cyclical outperformance, but the argument has become more balanced,” Bank of America Corp. strategists led by Sebastian Raedler wrote in a note on Friday. “The downside risks have increased,” they said.

Among individual stocks, Boohoo Group Plc jumped following an independent review of the U.K. fashion retailer’s supply chain. LVMH fell 0.4% after a report saying the luxury firm and Tiffany & Co. are staying away from the negotiating table even though a U.S. judge urged them to settle lawsuits over their ill-fated deal to combine.

UBS Global Wealth Management’s Chief Investment Officer Mark Haefele said “overall, we maintain our constructive outlook for equities over the coming months, while acknowledging that markets will likely be choppy.”

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