German shares slide as inflation jumps; STOXX 600 eyes worst week in 6 months

(Reuters) -German shares led declines in Europe on Friday on a bigger-than-expected jump in producer prices, while the benchmark STOXX 600 was on course for its worst week since February on signs of slowing growth and rising COVID-19 cases.

German shares slide as inflation jumps; STOXX 600 eyes worst week in 6 months

(Reuters) -German shares led declines in Europe on Friday on a bigger-than-expected jump in producer prices, while the benchmark STOXX 600 was on course for its worst week since February on signs of slowing growth and rising COVID-19 cases.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany August 19, 2021. REUTERS/Staff

By 0744 GMT, the pan-European STOXX 600 was down 0.4%, with Germany’s DAX sliding 0.6% as data showed producer prices jumped 10.4% year-on-year in July. Economists had expected a rise of 9.2%.

The mining index slipped 0.5%, extending a 4% fall on Thursday, and was set to be the worst performing European sector for the week. [MET/L]

Signs of a slowdown in the global economic recovery and a surge in cases of the Delta variant of the coronavirus have knocked Europe’s STOXX 600 off record highs this week.

The index slumped 1.5% on Thursday alone, tracking a fall in global equities on indications the U.S. Federal Reserve could start reining in easy money policies later this year. The U.S. S&P 500 reversed those declines to end marginally higher. [.N]

“The story markets appear to be telling us is they aren’t concerned about a Fed taper, but are concerned about a slowing global recovery story,” said Michael Hewson, chief market analyst at CMC Markets UK.

“There is also a fear that some governments, in looking to pursue a zero-COVID-19 strategy do more harm than good in trying to deal with a genie that is already out of the bottle, so to speak.”

Travel and leisure shares fell 0.9% on fears the spread of the Delta variant could lead to more travel restrictions.

London’s FTSE 100 was on course to snap a four-week winning streak as data showed a surprise fall in UK retail sales last week. [.L]

Focus next week will be on the high-profile annual U.S. Jackson Hole conference of central bankers in late-August, where Fed Chair Jerome Powell could signal he is ready to start easing monetary support.

ECB President Christine Lagarde will not attend the conference, a spokesperson for the central bank said this week.

Luxury goods tumbled 0.6% and were tracking weekly declines of more than 6%, pressured by worries over possible wealth policy developments in China.

In company news, UK supermarket Morrisons jumped 4.3% to the top of the STOXX 600 after agreeing a takeover offer worth 7.0 billion pounds ($9.54 billion), while Swedish real estate web portal Hemnet surged 14.9% on an upbeat quarterly report.

Reporting by Sagarika Jaisinghani in Bengaluru; editing by Uttaresh.V

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