Europe Stocks Fall on Travel Curbs, Weak Business Activity Data

European stocks fell on Friday, reversing almost all of its weekly gains after data showed euro zone business activity shrank in January as renewed coronavirus lockdowns to control the pandemic shuttered many businesses.

The panEuropean STOXX 600 index fell 0.7 and was set to end the week almost flat after gaining earlier on hopes of a massive U.S. stimulus under President Joe Biden.

Travel and leisure stocks fell 2, while other economically sensitive sectors such as automakers, oil gas and mining shed more than 1.5.

IHS Markits flash composite Purchasing Mangers Index PMI for the euro zone fell further below the 50 mark, separating growth from contraction, to 47.5 in January from Decembers 49.1.

The blocs dominant service industry was hit hard, with hospitality and entertainment venues forced to remain closed, but manufacturing remained strong as factories largely remained open.

The German DAX fell 0.6, Frances CAC 40 dropped 0.7 and euro zone stocks were down 0.8.

Since countries havent opened up, especially with Germany closed down over Christmas, theres no reason why the services sector is going to significantly recover, said Connor Campbell, financial analyst at SpreadEx.

The weakness in the sector is going to persist until lockdown eases significantly.

A European Central Bank survey showed the euro zone economy is likely to rebound this year, but at a slower pace than expected only a few months ago, before making up for the lost ground in 2022.


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