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LONDON – European markets retreated slightly on Friday, but are still on track for a positive week as higher Treasury yields resurfaced with investor caution.
The pan-European Stoxx 600 fell 0.2% at the start of trading, with tech stocks shedding 1.2% to lead losses while banks climbed 0.6%.
European stocks received a reasonably strong handover from the Asia-Pacific, where markets rallied widely during Friday’s trading after the S&P 500 hit record highs during US trading hours. United Thursday.
The momentum on Wall Street came after US President Joe Biden enacted a $ 1.9 trillion coronavirus relief program, which will send direct payments of up to $ 1,400 to most Americans. Futures related to major US indices were mixed on Friday in pre-traded exchanges.
However, the yield on the benchmark 10-year US Treasury bill rose again on Friday morning after the stimulus passed, briefly reaching 1.6%.
The European Central Bank on Thursday pledged to step up its bond buying efforts “significantly” in the second quarter after rising borrowing costs across the continent, with European bond yields following rising bond yields from the US Treasury over the past month.
Investors feared that rising bond yields could derail Europe’s economic recovery, raising borrowing costs for countries already grappling with the coronavirus crisis.
The European Union on Thursday approved Johnson & Johnson’s single-injection Covid-19 vaccine as the bloc seeks to revive its slow rollout of vaccination.
Meanwhile, Canada has insisted that inoculation of AstraZeneca and Oxford University is safe after its use was suspended in Denmark, Norway and Iceland following reports of blood clotting in some people who have received the vaccine.
On the data front, the UK economy shrank 2.9% in January from the previous month, official figures showed on Friday, a less severe contraction than expected as the country slipped into national lockdown.
“While the nationwide lockdown has shut down a range of industries, the blow to consumer industries has not been as bad as it could have been,” said James Smith, developed markets economist at ING .
“But what really stands out is health spending, where the rise of the government’s testing and tracing program and immunization programs added 0.9% to the GDP numbers alone.”
British luxury fashion brand Burberry saw its shares climb more than 7% to the top of the Stoxx 600 in early trading, after revaluing its forecasts on the back of a strong rebound in sales.
At the bottom of the index, real estate developer Berkeley Group fell 4.8% after projecting stable earnings in 2021.
Credit Suisse fell 4% amid questions from regulators over supply chain finance funds linked to the collapse of Greenhill Capital, according to Reuters.
– CNBC’s Saheli Roy Choudhury contributed to this report.
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