Europe close: Investors take profits in travel and leisure names, ECB officials warn of risks
European shares retreated on Wednesday as investors booked profits on Travel and Leisure names after top euro area officials voiced a degree of caution on the economic outlook.
Overnight, in a pre-recorded interview with French broadcaster LCI, European Central Bank chief, Christine Lagarde, cautioned that the unexpectedly early pick up in Covid-19 infections was a clear risk.
Echoing her remarks, ECB chief economist, Philip Lane, told Germany's RTL that the virus was contained but that worst case planning should proceed nevertheless.
Against that backdrop, the pan-European Stoxx 600 index was down 1.29% at 360.79, with all major bourses in the red while euro/dollar was 0.41% stronger to 1.1871.
The Stoxx 600's sector gauge for travel and leisure names did especially poorly, falling by 2.5%.
Dampening investor sentiment too, in the US Democrats and Republicans claimed to be making progress on fiscal stimulus talks, although some analysts were skeptical that a deal could be reached before the 3 November elections.
“The spread of the virus in Europe and the response of governments is a clear weight on the market, whilst US stimulus and election risks are to the fore. We’re also in the midst of an earnings season. And then we can throw in Brexit in to the mix – lots of reasons to chop sideways for a while longer,” said Markets.com analyst Neil Wilson.
London stocks dropped sharply as investors mulled the latest UK inflation and borrowing figures and remarks from chief EU Brexit negotiator Michel Barnier.
The FTSE 100 was pummeled, falling 1.91% to 5,776.5, while the pound was up 1.7% against the dollar at 1.3164 amid news that the UK had restated Brexit talks with the European Union.
The top-flight index tends to lose ground when the pound rallies as around 70% of its constituents derive their earnings from overseas.
In equity markets, Ericsson shares topped the Stoxx 600's leader board, jumping 10% after the Swedish telecommunications equipment maker reiterated full-year targets and reported stronger-than-expected profit.
Randstad shares climbed 6% after the Dutch recruitment company said third-quarter net profit fell, but revenue saw a partial recovery from a pandemic hit.
Shares in French payment software firm Ingenico rose after Worldline’s friendly tender offer netted 89% of the company.
Nestle shares dipped after the company reported lower sales for the first nine months of the year. Full-year guidance was lifted as demand for the Swiss food giant’s at-home products remained strong.
Shares of Centamin plunged 19% after the miner reported lower gold production and sales for the third quarter.