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Europe ends under slight pressure following PMIs, mixed earnings

After a choppy trading session, European equities finished predominantly mixed on Friday, after investors pored over another batch of earnings and digested new PMI figures for the U.K. and the euro zone.

The pan-European STOXX 600 index closed down 0.07 percent provisionally. On the week, however, the index ended on a positive note, up 0.7 percent. Most sectors also ended in negative territory, however, with the exception of telecoms, which popped 1.45 percent.

Looking at major bourses, London's FTSE remained resilient during trade, finishing up 0.46 percent. Meanwhile, France's CAC and Germany's DAX both wavered, finishing up around 0.1 percent and down 0.1 percent respectively.

European PMIs shake up sentiment

Symbol
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Price
 
Change
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FTSE
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DAX
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CAC
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IBEX 35
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The STOXX 600 saw a choppy start to its session, after a private sector survey showed that business activity in the euro zone did not fall as much as expected in July. A preliminary purchasing managers' index (PMI) for the manufacturing and services sectors in the euro zone came in at 52.9 in July, above expectations for a reading of 52.5 according to analysts polled by Reuters.

Meanwhile, PMI figures for the U.K., compiled by Markit, showed that the services sector slipped to 47.4 from June's 52.3, its lowest since March 2009. The country's flash manufacturing PMI also dropped, down to 49.1, from 52.1 in June. Overall, the figures caused the U.K. sterling to sink against the dollar, trading down over 1 percent at $1.3079 at Europe's close.

Following the U.K. data, Craig Erlam, senior market analyst at OANDA, said if the U.K. continues to see these kinds of figures, "the economy could be headed for recession before the year is out." Consequently, analysts elsewhere are suggesting that this could prompt the Bank of England to do more to stimulate growth in the country at its upcoming meeting in August.

In global markets, Asia finished mostly lower; despite shares of Nintendo and McDonald's Holdings closing higher after the highly popular "Pokemon Go" app finally launched in Japan, following weeks of anticipation. Meanwhile, U.S. stocks wavered, as investors wade through mixed earnings reports.

On the oil front, prices extended losses during trade as glut fears persisted, with Brent trading down at $45.47 and U.S. WTI at $44.04, around Europe's close.

Earnings come in full force

Looking at individual stocks, earnings continued to dominate sentiment on Friday with several corporates reporting. Telecoms giant Vodafone soared to the top of Europe's benchmarks, closing up 4.6 percent after it reported a better-than-expected 2.2 percent rise in first-quarter organic service revenue. The news lifted a whole host of telecoms stocks, including KPN, Orange and Telecom Italia.

Agrichemical giant Syngenta also ticked higher, closing up 1.57 percent, after the Swiss company reported first-half sales and profit that missed expectations.

Elsewhere, the world's largest maker of light bulbs, Philips Lighting, posted a 16 percent rise in second quarter core earnings prompting its share price to shoot up 6.6 percent on Friday.

Meanwhile, construction firm Skanska sank 4.8 percent, after its second-quarter earnings came in below expectations. U.K. property stocks also sat near the bottom of the STOXX 600, with Berkeley Group, Bovis Homes and Bellway all closing over 2 percent lower.

And the banking sector was dragged lower, after Spanish lender Banco de Sabadell warned that's its full-year profit would be slightly below 800 million euros, compared to a target of 1 billion euros in its two year strategic plan, Reuters reported. It's first half net profit also came in below a Reuters forecast. Shares sank some 7.5 percent.

In the retail space, U.K. brand Marks & Spencer slipped some 3.6 percent, after Barclays downgraded its rating on the stock to "underweight" from "equal weight"; and cut its price target. Swatch Group was also feeling the heat, off 2 percent, after UBS, Bernstein, Natixis and Helvea Baader Bank cut their price targets on the luxury brand.

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