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Zurich - European equities slipped for the first time in three days as inflation data missed projections, intensifying concern over the region’s economic outlook.
Financial firms led declines in the Stoxx Europe 600 Index, which fell 0.6% at 10:19 a.m. in London, taking its monthly loss to 3.7%. A report showed euro-area consumer prices in February plunged the most in a year, with the inflation rate falling to minus 0.2 from a positive reading in January.
At a meeting of the Group of 20 finance chiefs, only vague commitments to spur growth were made, adding to the scepticism, though Europe’s equities pared losses after China’s central bank cut the amount of cash the nation’s lenders must hold as reserves.
“It could be the sort of thing that could help us push higher,” said Jasper Lawler, a London-based market analyst at CMC Markets, referring to the People’s Bank of China move. “Inflation was weaker than expected, which should help the prospect of easing at the March meeting, but I’m not sure what they can do. The G-20 was a disappointment and didn’t provide what we needed to push higher. You can’t rely on ECB in general, we need more fiscal effort.”
European equities rallied for a second week, boosted by gains at some companies that reported earnings and a rebound in financial firms, which remain the worst performers among Stoxx 600 industries for the year.
The gauge ended the week at a valuation of 14.4 times estimated profits, up from 13.2 at this month’s low. At its peak last April, it traded near 17 times. It’s having its worst start to a year since 2009.
Concern over the efficacy of central-bank stimulus, a deepening oil rout and bad loans at banks have taken stock volatility up for a second month. In an additional sign that investors are losing faith in the region’s economic outlook, the gap between cheapest and most expensive European shares has grown to its widest in a decade.
European banks are falling for a third month, their longest streak since 2012. HSBC Holdings, Standard Chartered, Deutsche Bank AG and Italy’s Banca Monte dei Paschi di Siena SpA dropped more than 2%. London Stock Exchange Group, Bolsas y Mercados Espanoles SA and Deutsche Boerse AG also fell after rallying last week on merger activity.
Roche Holding AG declined 1% after saying studies for an asthma drug didn’t come to conclusive results. Ocado Group, a UK-only online retailer, lost 7.6% after Amazon.com stepped up its incursion into the market, signing a deal with Wm Morrison Supermarkets. Morrison climbed 4.7%. PostNL NV added 2.3% after confirming its 2016 outlook, while Gameloft SE rose 1% after the founding Guillemot family rejected a hostile takeover offer from Vivendi SA.
Stoxx 600 miners gained, with Randgold Resources up 3.8% as the precious metal advanced.
