European stocks head lower on virus, policy jitters

(Reuters) -European shares headed lower on Thursday after data outlined faltering German consumer morale as COVID-19 cases surge, while worries about monetary policy outlook further dented investor sentiment.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany August 13, 2021. REUTERS/Staff

The pan-European STOXX 600 index fell 0.4%, with mining, travel & leisure and retail stocks among the biggest losers.

Investors remained on edge ahead of the U.S. Federal Reserve’s annual Jackson Hole summit on Friday, with chair Jerome Powell’s speech likely to offer hints on the central bank’s plans to taper its stimulus programme.

Earlier, South Korean central bank lifted its base rate off a record low, the first major economy in Asia to do so.

“We think that those expecting clear communication about the shape and timing of the tapering of asset purchases may be disappointed,” said Paolo Zanghieri, senior economist at Generali Investments. “The recent data remain strong, but momentum is receding and inflation fears have not surged.”

A survey showed the mood among German consumers darkened heading into September as accelerating inflation and rising COVID-19 cases made them more hesitant to buy.

Business morale in the euro zone’s largest economy fell for the second month running in August, data on Wednesday showed.

“Risks are tilted to the downside over the near-term,” analysts at BCA Research said. “While global COVID-19 cases appear to be rolling over and the Ningbo-Zhoushan port has reopened, which are both positive for supply chains, COVID-19 cases are still climbing in Germany.”

European travel company Tui, airlines Wizz Air, Lufthansa and British Airways-owner IAG were down between 1.4% and 2.5%.

Germany’s blue-chip DAX dropped 0.5% to its lowest in almost a week, while UK’s FTSE 100 and France’s CAC 40 declined about 0.3% each.

Deutsche Bank’s asset management arm DWS Group fell 10.2% on a report U.S. authorities were investigating DWS over sustainability claims. Deutsche Bank’s shares were down 1.5%.

France’s Vivendi rose 3.4% after its unit Universal Music Group said it expects further revenue growth this year and it aims to pay out dividends once it lists in Amsterdam.

French conglomerate Bouygues gained 1.8% as it raised its full-year earnings outlook.

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