European stocks slip; economic data raises slowdown fears

© Reuters.

By Peter Nurse 

Investing.com - European stock markets edged lower Friday, with economic data pointing to a regional economic slowdown.

At 03:40 ET (07:40 GMT), the DAX index in Germany traded 0.4% lower, the CAC 40 in France dropped 0.2%, and the FTSE 100 in the U.K. fell 0.1%.

The month-long risky-asset rally in the wake of the stabilization of the banking system seems to be running out of steam as economic numbers point to an economic falloff.

British retail sales fell 0.9% on the month in March, an annual drop of 3.1%, as consumers struggled with discretionary spending given the sparing inflation.

“Poor weather impacted on sales across almost all sectors,” said Darren Morgan, ONS director of economic statistics. “Food store sales also slipped, with retailer feedback suggesting the increased cost of living and climbing food prices are continuing to affect consumer spending.”

Additionally, purchasing manager's index data from both France and Germany confirmed the divergence between the two main sectors of the economy, manufacturing and services.

The manufacturing surveys remained firmly in contraction territory in both countries, while services were robust, pointing to further inflationary pressures.

This is likely to result in the European Central Bank raising interest rates once more next month. 

On the corporate side, SAP (ETR:SAPG) stock edged higher, outperforming the wider market, after the business software maker reported first-quarter revenue growth of 10%, boosted by its cloud business.

Holcim (SIX:HOLN) stock fell 1.2% despite the world's biggest cement maker raising its full-year guidance after beating forecasts for the first quarter.

Oil prices edged lower Friday, on course for a hefty weekly loss on rising concerns the U.S. economy, the largest consumer of crude in the world, will fall into recession as the year progresses.

U.S. crude oil inventories fell more than forecast last week, Energy Information Administration data showed earlier this week, but gasoline stockpiles jumped unexpectedly on disappointing demand.

By 03:40 ET, U.S. crude futures traded 0.5% lower at $76.97 a barrel, while the Brent contract dropped 0.5% to $80.67. 

Both benchmarks slid by more than 2% to their lowest level since late March on Thursday, and are on track for a weekly drop of about 6%.

Additionally, gold futures fell 1.2% to $1,994.75/oz, while EUR/USD traded 0.2% lower at 1.0941.