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European stocks rebound from sharp selloff

MarketWatch logo MarketWatch 7/9/2021 Barbara Kollmeyer
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EUROPE MARKETS

Investors were getting a breather Friday from a recent selloff driven by concerns that a pandemic resurgence could complicate a global economic recovery, with European stocks rebounding along with U.S. stocks as bond yields stabilized.


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The Stoxx Europe 600 index rose 0.7% to 454.69, after a drop of 1.7% on Thursday. The German DAX rose 0.9%, the French CAC 40 gained 1.6% and the FTSE 100 added 0.4%.

U.S. stocks opened higher, though the Nasdaq Composite was barely higher, following Thursday’s session in which all three indexes booked their worst daily percentage drops since June 18 over concerns that the global economy recovery could by stymied by resurgent COVID-19 cases in some countries.

Concerns about a slower recovery and fading fears of high inflation drove a sharp drop in bond yields, with the 10-year U.S. Treasury yield  hitting 1.25% at one point on Thursday, its lowest since February. But that yield was back up to nearly 1.34% on Friday.

Japan declared a state of emergency in Tokyo that would continue through the Olympics, amid concerns a COVID-19 surge could multiply during the Games. Cases are rising across parts of the U.S. and Europe, with the U.K. and Portugal in particular struggling amid a wave of cases driven by the delta variant of coronavirus.

Soccer’s Euro 2020 final between Italy and England will take place on Sunday. More than 60,000 in the U.K. attended the semifinal between England and Denmark earlier this week. Italy will also reportedly fly in 1,000 fans who will be travel in and out of the country on Sunday and will be segregated in the stands and required to quarantine upon their return.

G-20 finance ministers and central bank governors will meet in Venice, Italy on Friday and Saturday to discuss tax reform and progress on recoveries amid the pandemic.

Data out on Friday showed the U.K. economy slowed in May, after a sharp rise in April as coronavirus restrictions eased and the economy got a boost. Fueled by services, gross domestic product grew 0.8% on the month, the Office for National Statistics said. April’s growth was revised down to 2% from a prior estimate of 2.3%.

Banks and pharmaceutical stocks drove some of the gains in Europe, with BNP Paribas shares up 2%, Novartis shares up 1.8% and those of Roche Holding up 0.8%.

Luxury goods makers were on the rise, with LVMH Moët Hennessy Louis Vuitton up 3.4%, Burberry 3% higher and Hermès International rising more 2.7%.

Energy companies reversed earlier losses, as oil prices climbed in an overall asset bounce. Shares of TotalEnergies and Royal Dutch Shell and BP rose 0.8% each.

Deal news drove shares of Vectura Group 13% higher. Philip Morris International said Friday that its subsidiary PMI Global Services has agreed to bid for the U.K. maker of inhaled therapies for the treatment of respiratory diseases in a deal valued at 1.05 billion pounds ($1.45 billion) in cash.

The acquisition is part of Philip Morris’s expansion into products beyond tobacco and nicotine, the company said.

Automakers got a lift after Volkswagen released preliminary results Friday afternoon, showing that it swung to an operating profit of around 11 billion euros ($13.03 billion) for the first half. It said deliveries to customers continued to recover, leading to strong group turnover. It added that global semiconductor bottlenecks had shifted and will impact operations in the second half.

Shares of Volkswagen surged more than 5%, Stellantis shares and BMW shares rose around 3% each.

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