Europe open: Shares open lower on US shorting wars, EU vaccine spat

European stocks fell sharply at the opening on Friday, after falls on Wall Street overnight in a week that saw small investors take on large US hedge funds and worries about vaccine rollouts on the Continent.

The pan-European Stoxx 600 index dropped 1.6% in early trading, but had settled back 0.96% lower at 0857 GMT. All major regional bourses were lower.

US markets have this week seen large gains in heavily shorted stocks, including Gamestop and AMC Entertainment, sparking a war between small investors taking collective action via forums on the Reddit website and large hedge funds who had taken short positions.

"The Reddit revolution has done a number on the European and US markets, scaring investors away from the message board-led volatility," said Spreadex analyst Connor Campbell.

"Of course, it’s not the Gamestop-saga alone. The vaccine rollout process in Europe has hit a confidence-undermining road bump this week, with the public spat between the UK, EU and AstraZeneca, while an end to lockdown in the UK appears nowhere in sight."

"It is telling how risk-off investors are feeling this Friday that news the Novavax covid-19 vaccine is nearly 90% effective – including against the UK variant – failed to induce the same dose of optimism as previous announcements of its kind."

In equity news at the end of a busy week for earnings, Sweden’s Ericsson jumped 9.16% after reporting fourth-quarter core earnings ahead of market estimates on the back of strong sales of 5G equipment. Shares in rival Nokia were up 4.5% on the news.

Swedish fashion retailer H&M fell 1.3% after full year profits plummeted and warned that the pandemic would hit it hard in the current quarter.

Trainline shares fell more than 5% after a downgrade to ‘underweight’ at Barclays.

On the upside, Just Eat Takeaway, which has benefited from Covid restrictions and lockdowns, was the standout gainer.