Europe open: Shares lower as German retail sales fall; Eyes on EZ, US data

(Sharecast News) - European shares opened lower on Friday as fears of an escalation of the Israel-Hamas war into a broader regional conflict and weak German retail sales hit sentiment. The pan-regional Stoxx 600 index was down 0.62% at 474.71 in early deals with all major bourses lower after a mixed session in Asia.

Markets will be looking ahead to flash eurozone inflation, UK business survey and key US jobless data later in the data.

Headline inflation readouts for France and Germany for December were both slightly higher on the previous month. Eurozone price rises fell sharply to 2.4% in November, but economists have pencilled in a 3% rise this time.

German retail sales dropped sharply in November as non-food sales tanked, according to the federal statistics office, Destatis.

Retail sales were down 2.5% during the month, wiping out the 1.1% gain registered in October, and surprising analysts who had pencilled in a decline of just 0.1%.

Compared with November 2022, the annual rate of decline worsened to 2.4% after a 0.1% fall the month before and well below the 0.5% decrease expected by the market.

"Markets have stalled in the first week of trading this year, unable to carry through last month's momentum in the face of renewed concerns around the amount, pace and timing of potential Federal Reserve interest rate cuts," said Richard Hunter, head of markets at Interactive Investor.

"The minutes from the latest Fed meeting earlier in the week appeared to dash any hopes of an imminent cut. While there was an admission that rates had peaked, the previous mantra of higher for longer seemed to remain firmly intact, dependent on economic data and inflation in particular."

"Despite this reiteration, market consensus is still pencilling in the first cut in March, although with rather less conviction than before, with the most likely timing now moving out to May."

In equity news, Endeavour Mining shares slumped 9.6% after chief executive Sebastien de Montessus was fired with immediate effect for serious misconduct related to an ­irregular payment of $6m and amid allegations over his personal ­conduct toward colleagues.

Reporting by Frank Prenesti for Sharecast.com