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European markets dip despite bright data

Roland JACKSON
·3-min read
Even though Covid restrictions have yet to lifted everywhere, Europe's economies are getting a lift, a survey finds

European stock markets fell Friday despite bright survey data for the region, with sentiment hit by US tax hike fears after a subdued Asian session.

London stocks shed 0.5 percent at midday, while Frankfurt and Paris dipped 0.3 percent and 0.2 percent respectively in early afternoon eurozone deals.

Asian share prices struggled to find clear direction, after Wall Street faltered overnight on tax hike speculation.

"After a weak handover from Wall Street, European bourses are trading broadly lower," said analyst Sophie Griffiths at trading firm OANDA.

"Indices are shrugging off better-than-expected PMI data and an improving picture in Europe, focusing on potential tax changes in the US instead."

The euro meanwhile rose against the dollar one day after the European Central Bank kept its stimulus taps wide open.

- Eurozone activity booms -

Eurozone economic recovery accelerated somewhat in April despite Covid restrictions, a key survey showed Friday, as business activity grew at its fastest pace since the summer thanks to a manufacturing boom.

IHS Markit's eurozone composite Purchasing Managers' Index (PMI), a key gauge of business activity, rose to 53.7 points in April from 53.2 in March, remaining above the 50-point level that indicates growth.

It marked a second straight month of expansion in business activity after four consecutive months of decline.

Britain's composite PMI surged in April to stand at 60 on the back of the nation's easing Covid restrictions.

That marked the highest level since late 2013, and compared with 56.4 in March.

However, European shares failed to win much traction from the news.

"Stocks are on the red in Europe despite mounting evidence of the improving economic picture," concluded Griffiths.

- Tax hikes in prospect? -

Wall Street had tumbled Thursday following reports that US President Joe Biden's administration is considering a tax hike on high-end stock investors.

Washington is said to be developing a plan to slap new levies on wealthy investors, including a near doubling of the tax on stock transaction profits to 39.6 percent for people earning more than $1 million.

Any tax plan faces a long process on Capitol Hill before becoming a reality, but analysts said the reports indicate hikes are very much in the mix in Washington.

Biden also called for an increase in corporate taxes to finance his $2 trillion infrastructure package.

The news hit 10-year US Treasury yields and the greenback while leaving all three main New York stock benchmarks down nearly one percent by the Thursday close.

It also sent jitters through digital currency markets, with Bitcoin dipping below $50,000 in Friday morning trade just days after clocking a record high above $63,000.

Oil prices paused though analysts warned signs of a diplomatic rapprochement between the US and Iran were putting downward pressure on prices.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.5 percent at 6,906.93 points

Frankfurt - DAX 30: DOWN 0.3 percent at 15,274.40

Paris - CAC 40: DOWN 0.2 percent at 6,253.98

EURO STOXX 50: DOWN 0.3 percent at 4,003.28

Tokyo - Nikkei 225: DOWN 0.6 percent at 29,020.63 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 29,078.75 (close)

Shanghai - Composite: UP 0.3 percent at 3,474.17 (close)

New York - Dow: DOWN 0.9 percent at 33,815.90 (close)

Euro/dollar: UP at $1.2056 from $1.2015

Pound/dollar: UP at $1.3875 from $1.3839

Euro/pound: UP at 86.86 pence from 86.82 pence

Dollar/yen: DOWN at 107.86 yen from 107.97 yen

Brent North Sea crude: DOWN 0.1 percent at $65.36 per barrel

West Texas Intermediate: UP 0.1 percent at $61.50 per barrel

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