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European stocks close sharply lower as euro surges; Dax hits session lows, down 1.7 percent

  • Major European bourses close sharply lower
  • Euro trades near two-year high against the dollar
  • The International Monetary Fund agreed to give $1.8 billion in loans to Greece
  • Hermes, Thales, Samsung and Vodafone announce their latest earnings.

Bourses in Europe closed sharply lower on Friday as euro strengthened and fresh corporate earnings failed to boost sentiment.

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IBEX 35
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The pan-European Stoxx 600 closed a little over 1 percent lower with most sectors moving south. The German DAX closed down 1.7 percent, it's worst trading day this year.

Meanwhile, the French CAC closed down about 1.8 percent.

Auto stocks led the falls in early-afternoon trade, down by more than 3 percent, driven by earnings. Valeo dragged down the sector, down by 6 percent, after its first half year result came in short of analysts' expectations.

Construction and materials stocks were also among the worst performers, down by 2 percent. ACS was down 6 percent after reports that it is considering a bid for the Italian family's Atlantia.

All sectors closed in negative territory. Vodafone reported better-than-expected revenue growth for its first quarter, mainly thanks to the Italian and Spanish markets. Its shares were up by 1.3 percent.

Meanwhile, Paysafe rose to the top of the European benchmark, up by nearly 7 percent, after Blackstone and CVC Capital made a $3.71 billion bid for the company. But Metso, down by 7 percent, was the worst-performing stock, after reporting second quarter results below expectations. Its profits were hit by high costs of raw materials.

Meanwhile, in the U.S., all three indexes are trading in negative territory. The Dow industrial average is down about 0.3 percent, with General Electric contributing the most losses. The S&P 500 fell 0.2 percent, with industrials leading decliners. The Nasdaq composite also slipped 0.2 percent.

General Electric reported better-than-expected quarterly results, but the stock fell more than 4 percent as sales slipped 12 percent year over year.

Hermes, Philips Lighting, Siemens

Hermes, the French luxury brand, said that operating profits should reach the peak level seen last year even though sales eased in the second quarter.

Philips Lighting, the world's largest maker of lights, reported a better-than-expected increase in its second-quarter core earnings due to slight improvements in its LED and home lighting businesses. However, investors weren't fully convinced as sales fell and the stock was down 7 percent.

The German firm Siemens decided to sell its minority stake in the Russian company Interautomatika following reports that four gas turbines built for a project in southern Russia were illegally moved to Crimea, the Financial Times reported.

Euro soars

The euro was near a two-year high after the president of the European Central Bank, Mario Draghi said that tapering will be discussed in the autumn. Most analysts foresee a tightening in policy next year. ECB policymakers believe that the October meeting will be the most appropriate for a decision on the QE program. The December meeting would be too late for a decision, Reuters reported citing sources.

Meanwhile, the International Monetary Fund agreed on Thursday evening to give $1.8 billion in loans to Greece, on the condition that Athens keeps reforming the country. The announcement might help Greece's efforts to return to markets.

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