European Stocks Fall as Travel Shares Slump on Quarantine Rule

(Bloomberg) -- European stocks fell in a broad retreat, after strong gains earlier in the week, with travel shares leading losses following the U.K.’s expanded quarantine rule.

The Stoxx Europe 600 Index declined 1.2% at the close, with all 19 sectors down. Travel and leisure stocks slid 2.3% after the U.K. added countries including France and the Netherlands to its 14-day quarantine rule for travelers. Oil stocks dropped, with PGS ASA down 3.1% after rejecting an offer from TGS NOPEC Geophysical Co. for its multi-client data library.

Concern about rising coronavirus infections cut into European stocks’ second straight weekly advance, with Germany adding the most cases since May 1. Investors are also awaiting progress on a U.S. stimulus package. The Stoxx 600 briefly broke above its 200-day moving average this week for the second time in less than a month, a level technical analysts say it needs to overcome for further gains.

The U.K.’s “new measures have had the effect of putting some downward pressure on travel and leisure stocks,” said Michael Hewson, chief market analyst at CMC Markets. “It’s also important to remember that for all of the weakness of the last 24 hours, markets here in Europe remain on course for their second successive weekly gain, despite some anxiety about rising infection rates across various parts of Europe.”

Bank of America Corp. strategists also struck a bullish note, turning positive on Europe versus global equities and lifting U.K. stocks to overweight. They expect European shares and cyclicals to peak in the fourth quarter.

After strong gains for U.S. and global equities since March lows, “many investors are nervous about the potential for the market to rally further,” UBS Global Wealth Management strategists led by Mark Haefele wrote in a note. “But we see further upside for equities in our central and upside scenarios.”

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