LONDON – European markets pulled back slightly on Friday but are still on track for a positive week as a surge in Treasury yields re-emerged investor caution.
The pan-European Stoxx 600 fell 0.2% in early trading, with tech stocks shedding 1.2% to lead losses, while banks rose 0.6%.
European stocks received a reasonably strong transfer from Asia-Pacific, where markets advanced widely during trading on Friday after the S&P 500 hit all-time highs in US trading hours on Thursday.
The boost on Wall Street came after US President Joe Biden enacted a $ 1.9 trillion coronavirus aid package, which will send direct payments of up to $ 1,400 to most Americans. . Futures linked to major US indices were mixed in early pre-market trading on Friday.
However, the yield on the benchmark 10-year US Treasury bond rose again on Friday morning following the approval of the stimulus, briefly reaching 1.6%.
On Thursday, the European Central Bank promised to step up its bond-buying efforts “significantly” in the second quarter after borrowing costs rose across the continent, and European bond yields continued to rise above bond yields. US Treasuries for the past month.
Investors were concerned that rising bond yields could derail Europe’s economic recovery, by increasing borrowing costs for countries already struggling with the coronavirus crisis.
The European Union approved Johnson & Johnson’s single-shot Covid-19 vaccine on Thursday as the bloc seeks to boost its slow launch of vaccination.
Meanwhile, Canada has insisted that the inoculation of AstraZeneca and the University of Oxford is safe after its use was suspended in Denmark, Norway and Iceland over reports of blood clotting in some people who had received the injection.
On the data front, the UK economy contracted 2.9% in January from the previous month, official figures showed on Friday, a less severe contraction than expected as the country reentered the lockdown. national.
“While the national shutdown closed a number of industries, the impact on consumer industries was not as bad as it could have been,” said James Smith, developed markets economist at ING.
“But what really stands out is health spending, where increased government test-and-trace scheme and vaccine programs added 0.9% to GDP figures alone.”
British luxury fashion brand Burberry saw its shares rise more than 7% to the top of the Stoxx 600 in early trading, after updating its guidance on a strong sales rebound.
At the bottom of the index, real estate developer Berkeley Group fell 4.8% after projecting flat earnings in 2021.
Credit Suisse fell 4% on questions from regulators about supply chain finance funds linked to Greenhill Capital’s collapse, according to Reuters.
– CNBC’s Saheli Roy Choudhury contributed to this report.
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