Markets

European markets close lower with data, virus spread in focus; travel stocks slide 2.5%

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Key Points
  • Business activity in the euro zone fell to a two-month low in January, preliminary data showed on Friday, on the back of stricter coronavirus-related lockdowns.
  • At the bottom of the European blue chip index, Anglo-German travel operator Tui dropped more than 16%.

LONDON — European markets pulled back Friday as investors monitored coronavirus restrictions and new economic data out of the euro zone.

The pan-European Stoxx 600 slipped 0.6% by the close, with travel and leisure stocks dropping 2.5% to lead losses. This came after European governments announced further travel restrictions to fight growing Covid infection rates and highly-infectious variants.

Business activity in the euro zone fell to a two-month low in January, preliminary data showed on Friday, on the back of stricter coronavirus-related lockdowns. Markit's flash composite PMI, which looks at activity across both manufacturing and services, dropped to 47.5 January from 49.1 in December, with a reading below 50 representing a contraction in activity.

January's preliminary PMIs for the U.K. showed the country suffering its sharpest drop in business activity since May, amid a third national lockdown. The IHS Markit/CIPS composite PMI fell to 40.6 in January from 50.4 in December. December's U.K. retail sales came in Friday morning at +0.3% month on month, lower than the +1.2% expected by analysts polled by Reuters.

European stocks received a lackluster handover from Asia-Pacific, where markets mostly declined Friday as investors took profits following a strong spell fueled by hopes of substantial economic stimulus from new U.S. President Joe Biden's administration.

Investors also had an eye out for new coronavirus restrictions in China. The country reported 103 new Covid-19 infections on Friday, down from 144 the previous day, while Beijing launched mass testing in parts of the city.

In terms of individual share price movement, engineering group Siemens climbed 7.2% to lead the Stoxx 600 after posting better-than-expected earnings before the opening bell.

Volkswagen shares gained 1.8% despite full-year profit almost halving in 2020 as a result of the pandemic, but comfortably beat analyst expectations, boosted by a rebound in sales in China and robust fourth-quarter deliveries.

At the bottom of the European blue chip index, Anglo-German travel operator Tui dropped more than 16%.