London: European shares slipped on Friday as investors worried whether the slew of recent macroeconomic data was a temporary problem or signalling something more significant.
“The greatest concern is what is going on in the economy, especially in the United States,” said Ian King, head of international equities at Legal & General, which has 356 billion pounds ($580 billion) under management.
But he added: “We think it’s a mid-cycle slowdown, nothing more dramatic than that. We’re looking towards the more cyclical end of the market. We have just had a good look at the auto sector and we continue to think it will do very well.”
At 4:40pm, the FTSEurofirst 300 index of top European shares was down 0.4% at 1,101.06 points. The index rose 0.9% in the previous session following six days of declines. It is down 1% so far this week, on track for a sixth straight weekly loss.
Stocks pared losses after the German parliament backed more aid for Greece in a non-binding vote, after getting assurances from Finance Minister Wolfgang Schaeuble that private creditors would share the costs of a new rescue package.
Greek banks were up 0.9%, ahead of a holiday in some European markets on Monday, but the wider STOXX Europe 600 banking index was down 0.3%.
Germany, Europe’s biggest economy, continues to be a bright spot for the euro zone and is expected to “far exceed” potential growth in 2012 when adjusted for working-day effects, the Bundesbank said on Friday.
It even risks overheating, added the bank.
The STOXX Europe 600 basic resources index fell 0.6%, tracking declines in copper prices that dropped after Chinese trade data showed a surprising fall in copper imports. The sector is down 12% this year, making it the poorest performer.
ENRC fell 2.9% to a new 12-month low with reports of further boardroom turmoil.
Overall, volumes were around 33% of the 90-day average. “It doesn’t look as though investors are doing too much, sitting on their positions,” King said.
He said the Greek situation was far from resolved and markets were looking for something more decisive.
A series of US economic data releases in the past days, including the latest payrolls report, have hurt sentiment, and investors are cautious as the US Federal Reserve’s $600 billion second round of stimulus expires at the end of June.
“Markets are still in a defensive state of mind. A series of disappointing economic figures, especially coming out of the US, bring back memories of the slowdown we saw last summer,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
Among individual movers, Swiss machinery maker Sulzer fell 4.9% after chief executive Ton Buechner said he was leaving to join Dutch paints group AkzoNobel.
French luxury group Hermes fell 3.3% after LVMH denied reports the company was planning a takeover bid for its smaller rival.
In a note on the recovery from the financial crisis of 2009, Andrew Milligan, head of global strategy at Standard Life Investments, said: “The good news is that some progress has been made by the corporate and financial sectors. The bad news is that many of the difficult decisions facing the government and household sectors have simply been postponed.
“This has important implications for investors: economic growth will be slow in the major OECD economies for some years, with financial markets showing a saw-toothed pattern as they are affected alternatively by stimulus measures and structural headwinds.”