Europe shares close lower, but UK data supports
European shares closed lower on Friday, but strong growth data from the U.K. helped pare losses.
The pan-European FTSEurofirst 300 index turned lower in the afternoon and closed provisionally down 0.1 percent at 1,284 points.
The index had crept into positive territory earlier during the day after the first reading of U.K. growth in the third quarter met expectations. The figure for the third quarter showed a 0.8 percent from the quarter before, which signaled the strongest growth since the second quarter of 2010.
However, the widely watched Ifo business climate data for Germany showed an unexpected fall for October. Business morale dropped for the first time in six months, falling to 107.4 and missing forecasts. Carsten Brzeski, senior economist at ING, said the drop served as a strong reminder that German invulnerability might not last.
"The German economy remains in good shape. The solid labor market and recovering industrial activity bode well for stable growth in the coming quarters. The external environment, however, gives rise to some new caution," he said in a research note.
(Read More: German business morale in first drop since April)
European markets started the day in negative territory, with autos leading decliners after the stellar sector gains seen in Thursday's session. Renault shares closed around 1.7 percent lower after the company reported that third quarter sales had been hit by currency headwinds. Volvo shares closed down around 5.2 percent after it announced 2,000 job cuts and reported a weak quarter.
Electrolux also weighed on European bourses, after reporting third quarter earnings that missed forecasts; shares closed nearly 6 percent lower. Shares of Spanish bank BBVA also fell, showing losses around 2.8 percent, after profits missed expectations and it cut its dividend payments.
In the U.K., ratings downgrades for retailer Debenhams were enough to send its shares down up to 2.7 percent. However, shares of G4S closed around 2.2 percent higher after the world's biggest security services firm said U.K. Chief Executive Richard Morris had resigned.
In the U.S., stock rose on Friday, with major average on pace for a third-consecutive weekly gain, boosted by U.S. earnings. In particular, Procter & Gamble nudged higher after the Dow component posted a narrow beat on the top line, while earnings met Wall Street expectations.
China credit fears resurface
In Asia, stocks were dealt a blow on the final trading day of the week as concerns over a repeat of June's credit crunch in China overshadowed optimism from gains on Wall Street.
China's short-term money market rates continued to spook investors after the 7-day repo rate, a key gauge of liquidity, opened at 4.8 percent on Friday, after rising to nearly 7 percent overnight.
The central bank tightened liquidity by withdrawing cash from the system for the third time in two weeks on Thursday. Analysts attribute the measure to rising home prices, hot money flowing into banks and the fact that recent data shows strength returning to the economy, which could be giving the central bank more room to tighten.
(Read More: Five warnings signs US stocks are getting too bubbly)
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