China data take toll on European stocks
MADRID (MarketWatch) -- Weaker-than-expected data on Chinese exports Friday triggered selling across European markets, with the main benchmark halting a five-day winning streak, as oil, drug and food stocks led the way south.
The Stoxx Europe 600 index (SXXP) fell 0.1% to 269.88, after closing up in the prior session. Markets found support Thursday from China data that opened the door to more monetary policy and well-received results from major blue chips.
For the week, Europe's benchmark closed up 1.6%.
However, a downside surprise in China trade data Friday rattled Asia and Europe stocks. Data showed an unexpected shrinking of the July trade surplus, with exports barely budging and imports also rising at a smaller rate. U.S. stock markets also traded weaker Friday.
Analysts are now starting to worry about the potential effectiveness of any monetary policy easing that markets are widely expecting in September. See: China July trade surplus unexpectedly shrinks.
"The swath of disappointing data [have] confirmed how difficult it is to turn China's economy around and while we can expect stimulus measures to be introduced, questions remain as to how effective they will be in the short term," said Rebecca O'Keefe, head of investment at Interactive Investor, in emailed comments.
Still, she said it would take a big fall to derail European stocks from a string of weekly gains.
"However, it remains to be seen whether the markets can sustain this rally if promises made on Europe fail to materialize," said O'Keefe. "Summer holiday and Olympic euphoria aside, we need some follow through to hold on to these higher levels."
Markets also continue to wait for some developments on the euro-zone crisis, expected to be thin on the ground until September, with many policy makers away on summer vacations. Doubt is beginning to creep into the marketplace that the European Central Bank will take action soon enough to dent borrowing costs for countries such as Spain and Italy.
Energy-related stocks were among the weakest in Europe Friday as crude prices tumbled after the International Energy Agency warned of weak global demand. Read: Oil futures tumble on global demand concerns
Banks were another sector taking a hit Friday, with shares of
The German DAX 30 index (DAX) fell 0.3% to 6,944.56, as several key stocks were under pressure. The DAX was set to mark its third-straight losing session on Friday. Heavyweight drug and chemical company Bayer AG (BAYN) fell 0.6% amid broader weakness for the sector.
On the upside in Frankfurt, shares of
Away from the main index Hannover Re AG (HNR1) fell 2.3% after the reinsurer said second-quarter profit fell 13% owing to a sharply higher tax rate and lower contributions from investments.
Shares of heavyweight banking major
Keeping the FTSE from falling any further, shares of