European shares rebounded from losses earlier in the session on Friday, as strong US retail sales data buoyed markets, although satellite company Eutelsat plunged 30 percent after slashing its outlook. The pan-European FTSEurofirst 300 index had spent much of the day in negative territory, then swung back up to stand 0.6 percent higher following the US figures.
The data showed US retail sales in April recorded their biggest increase in a year, suggesting that the world's biggest economy was regaining momentum after growth almost stalled in the first quarter. "The strong US data has lifted European markets, and we are fairly bullish in the medium term," said MB Capital trader Rick Jones. French video games maker Ubisoft climbed 8.3 percent after higher sales and a bullish outlook.
But Eutelsat's 30 percent fall made it the worst-performing stock in the region. The satellite company cut its outlook late on Thursday and suffered ratings downgrades on Friday. "Such a heavy hit to forecasts, coming from across the applications, will knock confidence in the story," Barclays' analysts wrote in a note, downgrading Eutelsat to "equal-weight" from "overweight".
European markets have sagged in recent weeks, with some investors blaming strength in the euro, uncertainty before Britain's vote on June 23 on European Union membership and a political stalemate in Spain. The FTSEurofirst remains down by around 10 percent so far in 2016, and the International Monetary Fund (IMF) said on Friday that a vote by Britain to leave the EU next month could hit the global economy and world stock markets.
The euro dipped against the dollar on Friday after the US currency rose following the US retail sales data, but some fund managers remained cautious on European equities. "We're quite cautious about the European market even though valuations are not expensive. Before taking big bets, investors need to know what will happen on the political front and where the euro will go," said Matteo Ramenghi, Chief Investment Officer at UBS WM Italy.