(Reuters) – European stock markets fell on Friday with investors disappointed by the lack of details in a trillion-euro emergency fund agreed by the bloc’s leaders as evidence grew of the global damage wrought by the coronavirus crisis.
After two days of gains, the pan-European STOXX 600 index <.STOXX> closed 1.1% lower. That took weekly losses to 1.2% as it added to a sell-off due to a historic collapse in oil prices, ending the index’s two-week winning streak.
Late on Thursday, EU leaders approved an immediate rescue package of about 500 billion euros but left the divisive details of a bigger fund until the summer. They rallied around a larger common budget for 2021-27 with a recovery programme and tasked the European Commission to present detailed proposals by May 6.
“Adding another dimension to budget talks by integrating the EU’s recovery plans will create a new layer of complexity and certainly will not make the process of finding an agreement easier,” said analysts at Deutsche Bank Research.
“The next formal meeting of EU leaders in the Council will be on June 18/19 and this might be the date where at least a principal agreement could be announced, but much more work and negotiations will be needed until then.”
London’s FTSE 100 <.FTSE> fell 1.3% with data showing UK retail sales crashed in March, a day after surveys signalled a collapse in April business activity across the globe and U.S. jobless claims topped 26 million in five weeks.
The STOXX 600 has recovered this month from eight-year lows hit in March, partly on hopes the strict stay-at-home orders would be eased on signs the pandemic was peaking in the worst hit parts of the world.
BofA Global Research said it expected STOXX 600 to gain a further 20% and hit 400 points by August, while business activity sentiment in the region could rise back to above 50 by the third quarter.
The travel and leisure <.SXTP> led losses among major European sectors, down 3.4%, with airline Lufthansa <LHAG.DE> losing 8%.
The carrier’s chief executive told employees he expects a smaller fleet and reduced staff after the coronavirus crisis, a day after it reported a first-quarter loss of 1.2 billion euros. Several brokerages cut price target on the stock, with Societe Generale double downgrading to “sell”.
The European banking index <.SX7P> fell 2.9% as S&P cut Commerzbank’s <CBKG.DE> credit rating by a notch and lowered its outlook for Deutsche Bank <DBKGn.DE> to negative from stable.
Swiss food giant Nestle <NESN.S> and French drugmaker Sanofi <SASY.PA> were the biggest boosts to the pan-region index after reporting strong first quarter results on pandemic induced panic buying of food products as well as pain and fever medicines.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Saumyadeb Chakrabarty, William Maclean)