European shares move little as focus turns to economic damage from COVID – Metro US

European shares move little as focus turns to economic damage from COVID

The German share price index DAX graph at the stock
The German share price index DAX graph at the stock exchange in Frankfurt

(Reuters) – European shares moved little on Thursday as an extension of coronavirus restrictions in Germany and a grim growth forecast for the United Kingdom brought the focus back to the near-term economic damage caused by the COVID-19 pandemic.

The pan-European STOXX 600 index ended down 0.1%, with gains in tech and healthcare offset by declines in automobile and energy <.SXEP> shares.

A second wave of coronavirus infections coupled with rising COVID-19 related deaths continues to sweep across Europe, prompting Germany, France and the United Kingdom to once again impose tough curbs, dealing a heavy blow to business activity as restaurants, gyms and shops remained closed.

“While it is still too early to say if the investor optimism is hurt as the wider market is still in an uptrend, there are plenty of negative headlines out there for investors to wait and think of the near-term effects,” said Connor Campbell, a financial analyst at Spreadex.

The benchmark STOXX 600 index is however still on course for its best month on record and market participants expect European equities to touch record highs next year, following promising vaccine trial results from three major drugmakers.

British shares were the worst hit with the benchmark FTSE 100 index down 0.4% after health minister Matt Hancock announced that several parts of England will be forced to live under the toughest category of COVID-19 restrictions when a national lockdown ends on Dec. 2.

Britain’s domestically focused mid-cap index dropped 0.9% after finance minister Rishi Sunak said that the record public borrowings were not sustainable, following his warning on Wednesday that the economy was on course to shrink by 11.3% this year.

Chancellor Angela Merkel said that Germany will face restrictions on public life for the foreseeable future.[nS8N2G900E]

Germany’s blue-chip DAX ended flat while France’s benchmark CAC 40 erased gains to end 0.1% lower after a survey showed consumer confidence in the country fell to a two-year low in November.

In company news, British insurer Aviva dropped 0.2% after saying it expects to pay a total 2020 dividend that is a third less than before the coronavirus outbreak.

British pub operators Mitchells & Butlers and Fuller, Smith & Turner fell 0.7% and 5.4% after they announced around 1,650 job cuts as the hospitality industry reels from new lockdowns.

(Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Shounak Dasgupta and Nick Macfie)

More from our Sister Sites