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Europe midday: Shares still lower as investor mood darkens

Fri 30 July 2021 11:30 | A A A

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(Sharecast News) - European stocks were still in the doldrums on Friday as continuing worries over Chinese regulation of tech stocks overshadowed upbeat earnings reports.

The pan-European Euro Stoxx 600 index was down 0.56% at midday, with mining and tech stocks leading the losses. All major Continental bourses were lower.

Shares in Asia-Pacific fell again on Friday, heading for their worst month since March 2020, as volatile trading continued for Chinese tech stocks.

Official preliminary data shoed the euro zone economy grew more strongly than expected in the second quarter as the bloc rebounded from a recession caused by the Covid-19 pandemic.

Gross domestic product in the region grew 2.0% quarter-on-quarter for a 13.7% year-on-year increase. Economists had expected a 1.5% quarterly and a 13.2% annual increase.

"It's looking like a soggy end to July both in meteorological terms and with the markets as so-so numbers from Amazon and a sell-off in Asia linked to Covid concerns had a dampening effect on sentiment," said AJ Bell financial analyst Danni Hewson.

"Disappointing results from highly rated testing specialist Intertek and International Consolidated Airlines as well as a downbeat reaction to NatWest's latest numbers did little to lift the mood.

"The mining sector also slumped and investors continued to fret about the Chinese crackdown on its technology sector, despite Beijing's efforts to dial back some of its recent rhetoric. There was talk about targeted rather than broad-based action."

In equity news, Intertek shares fell more than 6% % as the company reported a rise in first-half profits but missed estimates.

Italy's UniCredit jumped after posting higher-than-expected net profit, and said late on Thursday it had embarked on formal talks with the government over the possible acquisition of rival Monte dei Paschi di Siena. Monte dei Paschi shares were also higher.

French carmaker Renault jumped after it forecast a full-year 2021 profit even as a global shortage in chips and rising raw material costs hampered car output.

British Airways-owner IAG fell 3.7% after it said summer capacity would rise to 45% of pre-pandemic levels but warned that significant uncertainty remained. Rival Air France-KLM rose after it unveiled narrower losses for the second quarter but a company executive said people are still reluctant to travel.

NatWest lost ground even as the bank resumed dividend payments, announced a share buyback and said it swung to a half-year profit. Investors are worried that profits have been boosted by cash reserved for debt defaults during the pandemic and wonder where future profits growth will come from, analysts said.

German healthcare group Fresenius fell after it raised its 2021 earnings guidance but sounded cautious on new virus variants and stalling vaccination progress.

EssilorLuxottica rose 4% as the Ray-Ban maker raised its full-year guidance after revenue doubled in the second quarter.

Education publisher Pearson rose almost 5% as the company posted higher interim profits and unveiled a new app for US college students to allow them access to text materials.

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