Markets

European stocks close lower as recovery concerns offset U.S. stimulus hopes

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Key Points
  • President-elect Joe Biden, who takes office on Jan. 20, on Thursday announced details of his American Rescue Plan.
  • Rising Covid-19 cases in China, which have led to lockdowns in several cities, resurfaced concerns about an imminent global economic recovery.
  • The whole Dutch government collectively resigned on Friday after a scandal involving the mismanagement of childcare funds.

LONDON — European markets closed in negative territory on Friday as concern over new lockdown measures, political uncertainty and a reemergence of Covid-19 cases in China, dented the positive sentiment generated by U.S. President-elect Joe Biden's $1.9 trillion stimulus plan.

The pan-European Stoxx 600 ended the session down by 1% and logged a weekly loss of 0.8%. Basic resources shed 3.1% on Friday to lead losses as all sectors traded in negative territory except health care, which gained 0.7%.

Biden, who takes office on Jan. 20, on Thursday announced details of the American Rescue Plan, which includes increased federal unemployment payments extended through September and direct payments to many struggling Americans of $1,400.

Markets in Asia-Pacific started brightly on Friday, but tailed off by the afternoon as rising Covid-19 cases in China, which have led to lockdowns in several cities, resurfaced concerns about an imminent global economic recovery.

On Wall Street, stocks fell on Friday as major U.S. banks released their quarterly results, kicking off the earnings reporting season.

Back in Europe, Italy has been plunged into political turmoil once again as former Prime Minister Matteo Renzi decided to pull his support for the current coalition government on Wednesday. Current Prime Minister Giuseppe Conte resisted calls to resign, despite being stripped of the coalition's parliamentary majority.

Meanwhile, the whole Dutch government collectively resigned on Friday after a scandal involving the mismanagement of childcare funds, which drove thousands of families into financial hardship.

In Germany, the two-day special congress of the ruling Christian Democratic Union party began Friday, with Chancellor Angela Merkel's potential successor due to be selected on Saturday.

On the data front, the U.K. economy contracted by 2.6% in November as the country implemented fresh lockdown measures, according to official estimates published Friday. This exceeded the -5.7% expected by economists polled by Reuters, but marked a first contraction since the onset of the coronavirus crisis last spring.

France's official statistics agency reported Friday that December CPI (consumer price index) inflation came in at 0.0% year on year and 0.2% month on month.

Looking at individual stocks, Siemens Energy fell 6.3% to the bottom of the Stoxx 600 after General Electric filed a U.S. lawsuit alleging that one of its subsidiaries used stolen trade secrets to rig a contract bid.

Carrefour shares fell 2.9% after the French government on Thursday voiced opposition to the takeover of Europe's largest retailer by Canada's Alimentation Couche-Tard.

At the top of the European blue chip index, British IT firm AVEVA Group climbed almost 7% after a positive trading update.