The pan-European STOXX 600 index fell 1.0% to close to its lowest level since August 3, with the retail, oil and gas and financials sectors falling the most.
Investor fears over the resurgence of COVID-19 hampering Europe’s economic recovery dominated trading this week as the UK, Spain and France imposed further restrictions, while policymakers at the US Federal Reserve scared the markets on Wednesday by calling on the government to provide more budget support.
“Investor expectations for a slow and steady recovery have been tested this month,” wrote Geir Lode, head of global equities, international at Federated Hermes.
“With the recent shift in sentiment in the market, it should be remembered that market volatility still exists. Exceptionally low interest rates and abundant liquidity give investors little choice but to invest in larger assets. risky. ”
M&A speculation drove Italian bank stocks up 1.3% <.FTIT8300>, while the European banking index <.SX7P> fell 0.4%.
Italy’s third-largest bank, Banco BPM, jumped 5.8% and Credito Valtellinese jumped 11.6%, with traders citing a Bloomberg report suggesting discussions about a possible takeover of French bank Crédit Agricole.
Earlier, a spokeswoman for Banco BPM had said she was not in contact with its biggest rival UniCredit over a possible merger, dismissing a press report. UniCredit gained 2.3%.
The STOXX 600 had cut losses earlier in the session after surveys showed business morale in Germany and France improved for the fifth month in a row in September, suggesting both countries are expected to experience strong growth in the third trimester.
The relief, however, was temporary, with US markets hesitant to rise after a surprise rise in weekly jobless claims. [.N]
The German DAX fell 0.3%, outperforming regional indices, while the French CAC 40 fell 0.8%.
The UK’s FTSE 100 lagged behind with a decline of 1.3%, failing to spark joy over a new plan to support jobs. Under the “more targeted” program, Finance Minister Rishi Sunak said government support would only be available to workers whose employers keep them at least one-third of their regular hours.
UK cinema operator Cineworld fell 14.8% as it tipped to a loss and said it may have to raise more money if pressured to close theaters again due to restrictions government on social gatherings.
By Sruthi Shankar