Europe close: Modest losses amid profit-taking

(Sharecast News) - European stocks slipped into the red, amid profit-taking following five straight days of gains.

The Europe Stoxx 600 index was down 0.16% at 443.52, alongside modest losses for the main euro area country indices.

"After their exuberant performance last week, stocks have seen a quieter session, with some profit-taking in Europe and Wall Street eking out only small gains," said IG chief market analyst Chris Beauchamp.

"Last week's action-packed sessions saw a step-change in the outlook for global central bank policy, convincing investors that the period of steady rate increases is behind us."

The Stoxx 600 jumped 3.1% during the previous week after the Federal Reserve and Bank of England kept interest rates unchanged, while the European Central Bank had already indicated that a further hike in rates was unlikely.

Economic data comes in mixed

Investors were also having to digest a barrage of purchasing managers' indices (PMIs) during the morning session.

The final estimate for October's HCOB service-sector PMIs showed downward revisions in France and upwards revisions in Germany, resulting in a headline reading of 47.8 for the wider Eurozone service sector - in line with the 'flash' estimate. As a result, the Eurozone composite PMI was unchanged at 46.5 - though still firmly in negative territory.

"Overall, the PMIs continue to signal downside risks to Eurozone GDP growth, warning that services activity is now faltering, alongside a so-far sustained slowdown in manufacturing," said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics. "A slowdown in services output was the key driver of the further softening in EZ private sector activity at the start of Q4, amid an unchanged pace of contraction in industry, adding to the evidence that the slowdown in the economy is now becoming more broad-based."

In the UK, the S&P Global/CIPS construction PMI ticked up to 45.6 from 45.0 in September, but below consensus expectations of 46.0 and the second-lowest reading since May 2020.

Germany factory orders unexpectedly rose 0.2% in September, surprising analysts who had pencilled in a 1% decline. However, a substantial downward revisions to August's increase, from 3.9% to just 1.9%, painted a bleak outlook for manufacturing in the fourth quarter.

Meanwhile, the Sentix Eurozone investor sentiment index improved to -18.9 in November, from -21.9 in October - showing that the mood is still subdued but better than the consensus forecast of -22.9.

Ryanair lifts airline stocks

Ryanair shares rose 3% on the news it will pay its first ever dividend, as it posted a jump in first-half profit thanks to record summer traffic and higher fares. In the six months to the end of September, profit after tax rose 59% to €2.18bn, with revenues 30% higher at €8.58bn. Shares were up around 7% by midday.

Sector peers IAG, Easyjet, Deutsche Lufthansa and Air France-KLM also flew higher.

Telecom Italia dropped after agreeing to offload its landline business to US private equity group KKR for €22bn.

Aerospace group Melrose gained on the announcement that it had signed a new $5bn aftermarket services agreement with engines giant GE Aerospace.

Insurance company Prudential recovered from early selling after reporting that new business sales and profit growth slowed slightly in the third quarter.