European stocks fall as weak economic data affects sentiment

LONDON, Aug 19 (Reuters) – European stock indices fell on Friday after German producer prices surged to their biggest ever rise, while the dollar hit a one-month high as investors remained cautious.

Asian stocks had struggled to find direction as worries about the health of the Chinese economy weighed on sentiment, and at 0820 GMT the MSCI World Stock Index, which tracks stocks in 47 countries, was down 0.3% over the day (.MIWD00000PUS). Read more

In Europe, German producer prices – which are seen as a leading indicator of inflation – saw their biggest increases on record in July, according to data released at the start of the session, as the costs of energy continued to increase. Energy prices increased by 105% compared to July 2021, mainly due to higher natural gas and electricity prices.

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Natural gas prices hit a record close on Thursday. Germany’s finance ministry said Friday that Germany’s economic outlook was bleak. Read more

The European STOXX 600 was down 0.4% on the day, on track for a weekly decline of 0.4% as well (.STOXX).

German bond yields rose, with the 10-year yield gaining as much as 8 basis points to 1.184%, a four-week high, as producer price data was seen to bolster ‘stagflation’ fears – a combination of high inflation and low growth.

Meanwhile, UK consumer confidence hit its lowest level since at least 1974 in August as households felt “a sense of exasperation” at the rising cost of living. Read more

UK retail sales data for July was higher than expected, driven by an increase in online spending, but volumes are expected to resume their decline as costs rise. Read more

The Bank of England has warned that high inflation could tip Britain into recession later this year.

“As market participants begin to return from their holidays and look back on the past days and weeks, they will find that central banks are still far from meeting their inflation-control targets,” the strategists said. ING rates in a note to clients.

“It means an ongoing struggle between central bank tightening expectations and recession fears.”

The threat of higher borrowing costs also hung in the markets, as no less than four US Federal Reserve officials signaled that there was still work to be done on interest rates, the only difference being the speed and the level to be reached. Read more

The US dollar benefited from hawkish comments from the Fed, hitting a one-month high. The dollar index rose 0.2% to 107.7 and the euro was trading at $1.008. The euro has lost 1.7% against the dollar so far this week.

The dollar also rose against the Japanese yen, with the pair up 0.5% at 136.54.

The 10-year US Treasury yield climbed near a one-month high of 2.9317%.

Oil prices fell after two days of gains, forecast for a weekly decline as traders worried about a global economic slowdown. Read more

Bitcoin fell sharply and hit a three-week low of $21,404. Read more

Next week, investors will pay close attention to the minutes of the July meeting of European Central Banks, as well as comments from US Federal Reserve Chairman Jerome Powell when he addresses the annual conference. of the world’s central banks in Jackson Hole on August 26. LINK

UK and Eurozone “flash” PMI data is due on August 23rd.

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Reporting by Elizabeth Howcroft; Editing by Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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