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Europe midday: Shares fall on Evergrande woes, weak German Ifo

Fri 24 September 2021 11:32 | A A A

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(Sharecast News) - European stocks were lower on Friday as worries around debt-strapped property developer China Evergrande and a weak German business confidence survey hit sentiment.

The pan-European Stoxx 600 index was down 0.85% with all major regional bourses following suit. Asia stocks closed mixed, with China Evergrande shares in Hong Kong down around 7%. The Wall Street Journal reported Thursday that Chinese authorities have told local officials to prepare for a potential demise of the company.

Uncertainty also remained around whether Evergrande will pay the interest that was due Thursday on a dollar-denominated bond.

"There has been no update on the coupon payment which fell due yesterday, but increasingly there are some hopes that any default would have limited contagion outside of China, due to its lesser links with the global system," said interactive investor analyst Richard Hunter.

European Central Bank President Christine Lagarde told CNBC she believed Europe's direct exposure to the embattled company would be "limited."

Elsewhere, the Bank of England on Thursday kept monetary policy unchanged, downgraded economic growth projections for the third quarter and warned of rising inflation.

"Persistent and rising inflation would suggest that central banks have to act soon to get the situation under control which means interest rate hikes sooner rather than later. However, there is a bleak winter ahead given pressure on energy prices, supply chain problems and a sharp hike in the cost of living," said AJ Bell investment director Russ Mould.

In equity news, shares in EQT, Europe's biggest listed private equity firm, fell 7% to the bottom of the Stoxx after news it was being investigated by the Swedish Financial Supervisory Authority for suspected market abuse.

The financial watchdog said it is probing a $2.7bn public offering that allowed several executives to sell shares. The announcement from the regulator comes exactly on the two-year anniversary of EQT's initial public offering.

German sportswear makers Adidas and Puma fell after Nike cut its fiscal 2022 sales expectations and said it expected delays during the holiday shopping season, blaming the global supply chain crisis. JD Sports also fell on the news.

On the positive side, AstraZeneca gained with a 3% rise as its cancer drug Lynparza met its primary goal in a late-stage trial.

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