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June 15, 2018, 2:34 p.m. EDT

European stocks finish lower as trade-war worries reignite, but retain weekly gains

Bank stocks fall after ECB call

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By Carla Mozee, MarketWatch


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A container ship from China Shipping Line is loaded at the main container port in Hamburg, Germany. Northern Germany.

European stocks on Friday finished deeply in the red a day after scoring their best session in a month, with bank shares under pressure amid a ramp up in U.S.-China trade clash. However, most of the major European bourses retained weekly gains.

How markets are performing

The broader Stoxx Europe 600 Index /zigman2/quotes/210599654/delayed XX:SXXP -0.77% fell 1% to 389.13, topped by the consumer goods and industrial sectors. For the week, however, the pan-European index posted a 1% weekly advance, representing its best such rise since the period ended May 11, according to FactSet data.

On Thursday, the index jumped 1.2%—its best gain since April 5, driven largely by a tumble in the euro.

Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.04% retreated by 0.7% to 13,010.55, but posted a 1.9% weekly advance, and Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX -1.22%  dropped 1.1% to 9,851, but held on to a 1.1% weekly climb. The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.73%  lost 1.7% to 7,633.91, producing its worst daily tumble since Feb. 6, and ending with a weekly skid of 0.6%.

Italy’s FTSE MIB index /zigman2/quotes/210598024/delayed IT:I945 -1.98% shed 1.3% to 22,190.45, but still finished the period with a weekly rise of 3.9%, while France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -1.21% gave up 0.5% to 5,501.88, but booked a weekly return of 1%.

Read : 5 key takeaways from the ECB’s decision to wind down its bond buying

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.3089% traded at $1.1590, up from $1.1569 late Thursday in New York.

What’s driving markets?

European bourses had a listless start before most moved lower alongside a slide in U.S. stock futures . Those moves followed reports of a second wave of tariffs on Chinese goods by the U.S.

Indeed, President Donald Trump announced levies on about $50 billion in Chinese goods, and Beijing responded with retaliatory tariffs on U.S. products.

In Europe, bank stocks fared the worst Friday. The Stoxx Europe 600 Bank Index /zigman2/quotes/210599339/delayed XX:SX7P -2.10%  finished down 1%. Lenders were under pressure after the ECB on Thursday said the eurozone’s interest rates—which are at all-time lows—will remain at their present levels “at least through the summer of 2019,” and that the central bank will closely monitor inflation developments.

Bank profits are helped by higher interest rates, as that increases the spread banks earn between longer-term assets, such as loans, and shorter-term liabilities.

On Friday, Eurostat confirmed its initial estimate of a 1.9% inflation rate for the eurozone in May year-over-year, meeting expectations. The ECB targets inflation at just below 2%.

Meanwhile, the euro was modestly higher after it was slammed down by more than 1.5% in the prior session, hurt by the ECB’s decision to hold off on raising interest rates. After the ECB’s statement Thursday, there was speculation that the central bank could be shifting toward a rate hike in early to mid-2019, as it signaled it will wind down its €2.5 trillion ($2.95 trillion) program of bond buying, or quantitative easing.

/zigman2/quotes/210599654/delayed
XX : STOXX
363.64
-2.84 -0.77%
Volume: 0.00
July 9, 2020 5:50p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
12,489.46
-5.35 -0.04%
Volume: 76,140
July 9, 2020 6:30p
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/zigman2/quotes/210597995/delayed
XX : Spain: Madrid
7,236.90
-89.50 -1.22%
Volume: 176.47M
July 9, 2020 5:38p
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,049.62
-106.54 -1.73%
Volume: 659,498
July 9, 2020 4:59p
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/zigman2/quotes/210598024/delayed
IT : Borsa Italiana
19,505.95
-393.58 -1.98%
Volume: 0.00
July 9, 2020 5:35p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
4,921.01
-60.12 -1.21%
Volume: 83,118
July 9, 2020 6:05p
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/zigman2/quotes/210561242/realtime/sampled
US : Tullett Prebon
1.1295
-0.0035 -0.3089%
Volume: 0.0000
July 9, 2020 2:51p
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/zigman2/quotes/210599339/delayed
XX : STOXX
94.81
-2.03 -2.10%
Volume: 0.00
July 9, 2020 5:50p
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