Investing.com - European stocks retreated in Friday trade, dragged down by inflation concerns and the dimming prospects for a quantitative easing from the European Central Bank.
At the end of Friday’s European session, the STOXX 50 Index lost 1.48% to 2,179.66, France’s CAC 40 fell 1.50% to 2,981.96, Britain’s FTSE 100 shed 1.32% to 5,128.48, and Germany’s DAX declined 2.44% to close at 5,502.02.
In Thursday trade, U.S. and European stock markets got a lift from a German parliamentary vote approving an expansion of the USD600 billion European Financial Stability Facility.
But the release Friday of an unexpected drop in German retail sales sent European shares lower late in the day’s session.
Germany’s Federal Statistics Office reported that retail sales fell by a seasonally adjusted 2.9% in August, down from a 0.3% gain the previous month. Market forecasts for retail sales in Europe’s largest economy were for a 0.5% decline.
Additionally, the European Union’s Statistics Office reported that euro-zone inflation jumped by 3% in September, up for 2.5% in August, the largest year on year increase since October of 2008.
The rise in prices quashed hopes that the European Central Bank would be lowering interest rates any time soon, complicating the ECB’s options for addressing the region’s debt concerns.
Among top losers in the session were banks and financial issues, as Europe’s sovereign debt crisis weighed heavy on investor sentiment.
In Paris, Societe General SA slumped 5.1%, while Deutsche Bank AG sank 4.9%.
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The French and German indexes closed out the quarter ending September 30, down 25%.
Figures showing a contraction in China’s manufacturing sector, the third monthly drop in a row, took a toll on retailers in the region, as dealers anticipated a drop in sales for luxury goods.
Burberry Group PLC fell 2.2% in London, with PPR SA, parent company of Gucci, sank by 6.1%. LVMH Moet Hennessey Louis Vuitton SA dropped 3.4% in Paris.
Meanwhile in late afternoon trade on Wall Street, the Dow Jones Industrial Average was down 0.78% to 11,067.29, the Nasdaq Composite Index gave up 1.18% to 2,451.47 and the S&P 500 was lower by 1.04% at 1,148.37.
Europe’s Markit Economics was due to release its Manufacturing Purchasing Manager’s Index for the euro-zone on Monday.