By Sruthi Shankar
(Reuters) -European stocks hit a three-week low on Thursday, hurt by disappointing earnings reports, elevated U.S. bond yields and data pointing to slowing business activity in the euro zone.
The pan-European STOXX 600 index fell 0.9%, its third consecutive day of losses.
Stocks globally came under pressure as U.S. bonds yields hit nine-month peaks following strong private jobs data and the announced refunding of Washington’s maturing debt.
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Further dampening the mood, a survey showed the downturn in euro zone business activity worsened more than initially thought in July as the slump in manufacturing was accompanied by a further slowing of growth in the bloc’s dominant services industry.
HCOB’s final Composite Purchasing Managers’ Index (PMI), seen as a good gauge of overall economic health, dropped to an eight-month low of 48.6 in July from June’s 49.9.
“We have a mixed macro picture in Europe.
The decline in PMIs last week was notable and inflation remains a bit firm. We still have this growth-inflation trade off that central banks have to navigate,” said Karim Chedid, head of investment strategy for iShares at BlackRock for EMEA.
“All this means that there could be a bit more volatility for equity markets over the subsequent weeks because of this data-dependent environment.”
The mood in European markets darkened this week as muted factory activity data, signs of sticky inflation and a surprise downgrade in the U.S.
credit rating pushed investors to step back from a market that had hit multi-year highs.
The STOXX 600 has shed more than 3% since touching a 1-1/2-year high last week.
UK’s FTSE 100 fell 1.5% ahead of the Bank of England’s monetary policy decision expected to result in its 14th interest rate hike in a row.
Germany’s Infineon tumbled 10.1% to the bottom of the benchmark index after the chipmaker forecast a decline in fourth-quarter revenue as the market for semiconductors remains a mixed picture.
Deutsche Lufthansa slid 5.8% after the German airline group posted adjusted free cash flow below analysts’ expectations.
Among the bright spots, shares of Societe Generale, France’s third-biggest listed bank, gained 2.2% it after it reported better-than-expected quarterly earnings.
Anheuser-Busch InBev climbed 3.7% after the world’s largest brewer reported higher-than-expected quarterly earnings and retained its 2023 forecast, supported by China’s gradual post-COVID recovery and strength elsewhere.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips and Sonia Cheema)
