PARIS: European shares fell on Wednesday as investors maintained a cautious stance after data signalled a slower-than-expected pick-up in the euro zone’s economic recovery.
The pan-European STOXX 600 index slipped 0.2%, with industrial goods and services dropping 2.1%.
Limiting losses, the utilities index climbed 1.6% and healthcare stocks rose 1.7%, with both indexes hitting their highest level since August 2022 amid growing economic uncertainty “There’s a tilt towards defensives.
There’s confidence that if there’s a lagged impact from tightening liquidity, it’s going to fall on areas like commercial real estate, smaller business and larger businesses, which will be resilient,” said Jamie Mills O’Brien, investment director at Abrdn.
“You’ve got the benefit from the repricing of rates that has outweighed the impact from tightening credit conditions.”
Despite starting 2023 on an upbeat note, European equities fell last month to record their worst March since 2020 as recent turmoil in banks fuelled concerns about global growth and mixed economic data and recession fears clouded the outlook for the region’s interest rates.
The euro zone’s recovery picked up pace last month, but the upturn was uneven across industries and countries, according to a survey that showed price pressures remained elevated in the region.
Food inflation is still intensifying in Europe and may be the key driver of price growth now, said European Central Bank chief economist Philip Lane.
In Germany, industrial orders rose more than expected in February, driven by a strong growth in the vehicle construction sector.
However, stocks in Germany shed 0.5% dragged down by a weakness in industrial and consumer discretionary shares.
Among individual stocks, Swedish truck maker Volvo AB dropped 11.8% to the bottom of Europe’s STOXX 600 on trading ex-dividend.
Sodexo jumped 11.3% as the French catering and food services group plans to spin off and list its Benefits & Rewards Services business in 2024.
Nexans fell 7.1% after top shareholder Invexans Limited UK decreased its stake in the French cable company.
Shares of UBS dipped 1.3% as the Swiss lender sought to assure investors that it can make its unexpected takeover of rival Credit Suisse work and pay off for its shareholders.
Italy’s Telecom Italia added 0.5% after Italian media reports that KKR aims at improving its offer on network grid.
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