European Stocks Trim Best Week Since November on Rising Yields
(Bloomberg) -- European shares slipped from a one-year high, trimming their best weekly advance since November, as a rise in U.S. Treasury yields fueled an exit from risk assets.
The Stoxx Europe 600 Index fell 0.3% by the close in London. Technology shares led losses, mirroring declines in the Nasdaq 100, while some other rate-sensitive and defensive sectors like utilities, also dropped. ASML Holding NV and SAP SE were among the worst performers. The shift into cyclical and cheaper value shares continued, with banks leading climbers.
The benchmark gained 3.5% this week, its best performance in four months, as investors and strategists bet on a strong economic recovery that will boost the value-heavy European market. Trading has been volatile: The Stoxx 600 climbed on Thursday after the European Central Bank pledged to boost the pace of its bond-buying program, but broader yield jitters returned to the fore on Friday.
Still, the European stock market is within about 2.5% of the record high reached last year. Adding support, European equity funds received $38 million in inflows in the week through March 10, halting three weeks of outflows, according to a report by Bank of America Corp., citing EPFR Global data.
“A pause in the reflation trade is logical, but we think the value rotation has legs,” said Barclays Plc strategist Emmanuel Cau. “Most investors are still not prepared for it, following a decade of growth dominance.”
Among notable movers, Burberry Group Plc jumped 6.9% after the British retailer said the rebound in its fourth quarter has been stronger than analysts expected. U.K. homebuilder Berkeley Group Holdings Plc dropped 5.8% as it expects the value of its sales reservations to drop this year.
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