Economic news

European Shares Fall as Rate-Hike Worries Resurface

  • STOXX 600 still set for weekly gains
  • Rate-sensitive technology stocks lead falls
  • Mercedes-Benz up on earnings boost
  • Sika rises as guidance beats expectations
  • NatWest outlook sends shares tumbling

Feb 17 (Reuters) - European shares slid nearly 1% on Friday as rate-sensitive technology slipped on renewed bets of the U.S. Federal Reserve sticking to its monetary tightening trajectory, while Mercedes-Benz rose on upbeat earnings.

The pan-European STOXX 600 index slid 0.8%, with technology shares tumbling 1.7%.

U.S. data on Thursday showed the highest rise in producer prices in seven months in January, while another report showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, fuelling the prospects of the Fed raising rates for longer.

Goldman Sachs said it now expects the U.S. Federal Reserve to raise interest rates three more times this year, by a quarter of a percentage point each.

"While U.S. inflation may not have moderated as quickly as expected and economic activity has held up better," said Mark Haefele, chief investment officer at UBS Global Wealth Management, "price pressures will be easing through 2023."

"Recent economic data in the U.S. continues to suggest that the economy is in better shape than many had anticipated, fuelling expectations that the Fed will have to tighten further beyond the current quarter."

French stocks fell 0.8%, coming off record highs hit in the previous session, while Germany's DAX index shed 1.0%.

Still, the broader STOXX 600 was set for weekly gains of 0.6% on a boost from upbeat earnings, improving eurozone economic outlook, with certain consumer discretionary stocks, including big luxury names benefiting from the reopening in China.

Premium car maker Mercedes-Benz Group rose 2.5%, beating analysts' estimate for annual earnings and posted a stronger revenue.

The European automobiles & parts sector index was among the few sectoral gainers on the day, rising 0.2%.

Shares of Sika AG gained 4.3% after the Swiss chemicals company reported a better-than-expected operating profit for 2022.

UK lender NatWest shares sank 6.9% after it warned that rising interest rates might not deliver the long-lasting earnings investors hoped for.

Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sherry Jacob-Phillips and Dhanya Ann Thoppil

Source: Reuters

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