By Sara Sjolin, MarketWatch
Pare losses after U.S. opens with sharp gains
European stocks trimmed sharp losses in choppy Friday trade,
after Wall Street surged at the open, partly rebounding after a
plunge on Thursday that yanked both the S&P 500 index and Dow
into correction territory.
Stocks in Europe, however, were still on track for their worst
week in two years.
What are markets doing?
The Stoxx Europe 600 index fell 0.7% to 371.68, building on a
1.6% loss from Thursday
(http://www.marketwatch.com/story/european-stocks-head-lower-after-wall-street-fails-to-rebound-2018-02-08).
The pan-European benchmark is now on track for a 4.2% weekly
decline, which would be its biggest since February 2016.
Germany's DAX 30 index gave up 0.8% to 12,169.24, sliding into
correction territory from its record high of 13,559.60 hit on Jan.
23. A correction is defined as a pullback from a recent peak of
least 10%. For the week, the index was on track for a 4.8%
loss.
France's CAC 40 index sank 0.8% to 5,108.71, and the U.K.'s FTSE
100 index gave up 0.7% to 7,125.28
(http://www.marketwatch.com/story/ftse-100-drops-to-10-month-low-in-global-stock-smack-down-2018-02-09).
The two benchmarks were set for weekly losses of 4.8% and 4.3%,
respectively.
The euro rose to $1.2255, up from $1.2249 late Thursday in New
York.
What is driving the market?
The weakness in Europe followed Wall Street's Thursday plunge,
with the Dow Jones Industrial Average tumbling more than 1,000
points
(http://www.marketwatch.com/story/dow-poised-to-edge-up-as-traders-lick-their-wounds-after-a-punishing-stretch-2018-02-08).
That was the second time this week the U.S. blue-chip index logged
a four-digit slide, having shed 1,175 points on Monday when the
selloff set in.
After a bouncy futures session, U.S. stocks opened with firm
gains on Friday
(http://www.marketwatch.com/story/us-stock-futures-rise-as-dow-faces-worst-week-since-the-global-financial-crisis-2018-02-09),
helping European markets recover from intraday lows.
The U.S. slump on Thursday also continued into Asian stock
markets, which wrapped up their worst week in years
(http://www.marketwatch.com/story/asian-markets-skid-after-wall-street-sinks-into-correction-territory-2018-02-08).
Chinese stocks were hammered, with the Shanghai Composite Index
sliding 4.1%.
Seen as driving the action were concerns over rising volatility
(http://www.marketwatch.com/story/volatility-shock-wave-has-wiped-52-trillion-from-global-markets-sent-five-sectors-into-correction-territory-2018-02-08)
and worries that faster-than-expected inflation could lead to more
Federal Reserve interest-rate hikes
(http://www.marketwatch.com/story/feds-george-says-three-rate-hikes-this-year-is-reasonable-baseline-2018-02-08)
this year than expected. Analysts have also noted that stocks
globally were due for a pullback after scoring big gains in 2017
and in January.
Investors were also watching developments in Washington, where
the U.S. government briefly shut down just past midnight. The House
of Representatives voted early Friday for a two-year budget deal,
approving a package that would reopen the federal government
(http://www.marketwatch.com/story/senate-passes-budget-deal-as-government-remains-shut-down-2018-02-09).
The House followed the Senate in approving the sweeping bill, which
would also suspend the debt limit through March 1, 2019. President
Donald Trump tweeted that he had signed the bill.
See:Is the decadeslong downtrend in interest rates finally over?
(http://www.marketwatch.com/story/is-the-decades-long-downtrend-in-interest-rates-finally-over-2018-02-08)
Read:Volatility aftershocks? Here's what stock-market investors
need to know
(http://www.marketwatch.com/story/stock-market-investors-weigh-potential-aftershocks-from-volatility-spike-2018-02-08)
What are analysts saying?
"It would appear that the brief respite for stocks seen in the
middle of the week turned out to be the eye of the storm, as once
again rising bond yields prompted a further bout of selling across
the board, not only in the U.S. last night but in Asia again this
morning," said Michael Hewson, chief market analyst at CMC Markets
UK, in a note.
"Concerns about rising interest rates weren't helped by an
unexpectedly hawkish inflation report
(http://www.marketwatch.com/story/a-uk-rate-rise-in-may-analysts-digest-hawkish-surprise-from-boe-2018-02-08)
from the Bank of England yesterday, while the latest Chinese trade
data suggested that the Chinese economy appeared to be ticking
along nicely, even if the trade surplus did shrink quite sharply as
a result of a big jump in import," he added.
Which stocks are in focus?
Shares of A.P. Moeller-Maersk AS (MAERSK-B.KO) lost 0.6% after
the Danish shipping company reported fourth-quarter profit below
analyst forecasts
(http://www.marketwatch.com/story/maersk-swings-to-profit-expects-better-2018-2018-02-09).
Banks, which have been among hardest hit stocks in the selloff,
extended their slump on Friday. The Stoxx 600 Banks Index fell
1.2%, deepening its weekly loss to 4.1%.
On an upbeat note, shares of L'Oréal SA (OR.FR) climbed 1.6%
after the French cosmetics group posted fourth-quarter sales that
blast past expectations.
Economic news
French industrial production rose slightly more-than-expected in
December, climbing 0.5%. Meanwhile, in the U.K. industrial
production fell 1.3% in December
(http://www.marketwatch.com/story/uk-industrial-output-hit-by-north-sea-shutdown-2018-02-09)
due to an emergency shutdown of a major North Sea pipeline.
(END) Dow Jones Newswires
February 09, 2018 10:30 ET (15:30 GMT)
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