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European Equity Benchmarks Close Mixed; Euro Area Economic Growth Eases in May

The broad-based major European indices closed mixed in Tuesday trading as falling bank stocks burdened the UK and French markets, while the German exchange edge higher.

In economic news, Eurozone new business growth eased to an 18-month low, with Germany, France, Italy, and Spain seeing slower rates of increase, according to data from IHS Markit. IHS said that although growth remained relatively solid, the cooling trend in new orders suggest that the outlook for the economy is not as bright as it was in the opening quarter. The IHS Markit Eurozone PMI Composite Output Index was 54.1 in May, unchanged from the earlier flash estimate, and its lowest level since November 2016.

"The survey signals GDP growth of 0.4-0.5% for the second quarter, but there is much uncertainty as to whether the pace will continue to weaken in coming months," said Chris Williamson, IHS Markit's chief business economist. "With the economic indicators turning down at the same time as political uncertainty has spiked higher, the eurozone's outlook has darkened dramatically compared to the sunny forecast seen at the start of the year."

Meanwhile, Eurostat, the statistical office of the European Union, reported that the seasonally adjusted volume of retail trade increased 0.1% in the euro area (EA19) in April, compared with March, and rose 0.4% in the EU28. In March, the retail trade volume rose 0.4% in the euro area and 0.2% in the EU28. Compared with the year-ago month, the calendar adjusted retail sales index increased 1.7% in the euro area and in the EU28 in April.

The highest monthly increases in the total retail trade volume were registered in Germany (+2.3%) and Romania (+1.7%). Ireland, Lithuania and the United Kingdom all increased by 1.5%. The largest decreases were observed in Portugal (-4.1%), Slovenia (-2.0%) and Estonia (-1.8%). And the highest yearly increases in the total retail trade volume were registered in Romania (+7.4%), Poland (+6.6%) and Lithuania (+6.5%). The largest decreases were observed in Malta (-3.1%), Belgium (-1.5%), and Slovenia (-1.4%).

And in the UK, business activity growth reached three-month high in May, according to IHS Markit. However, it also said new business volumes rose at a relatively subdued rate, with survey respondents commenting that Brexit-related uncertainty remained a key factor holding back decision making among clients.

"It felt as though the sector was losing its lifeblood this month as Brexit worries continued to claw away at confidence, new orders and business margins," said Duncan Brock, group director at the Chartered Institute of Procurement & Supply. "The survey revealed clients and consumers were reluctant to spend with one of the lowest rises in new orders in the last two years, and though overall activity increased, it was at a restrained pace."

In equities, banks helped weigh down the FTSE in London as Royal Bank of Scotland, Barclays, and Standard Chartered lost 5.3%, 3.3%, and 2.3% respectively. Travel stocks also burdened the market as cruise line operator Carnival dropped 6.4%, while airline operators International Consolidated Airlines, and easyJet were off 3.5% and 2.5%, and travel company TUI declined 1.9%

In Frankfurt, semiconductor company Infineon Technologies led the DAX into positive territory, rising 2.7%, followed by kidney dialysis company Fresenius Medical Care, which climbed 1.4%. Stock market operator Deutsche Boerse, and tire maker Continental closed 1.4% and 1.1% higher respectively. Industrial group ThyssenKrupp closed up 1%.

In Paris, banks led the CAC lower as Credit Agricole, BNP Paribas, and Societe Generale fell 2.1%, 1.8%, and 1.4% respectively. Telecommunication services company Orange led all decliners, falling 2.7% . Electricity management firm Schneider Electric also was among the biggest losers, dropping 2.4%, while public relations company Publicis Groupe, and water and waste management company Veolia Environnement were off 1.6% and 1.1%.

The FTSE lost 0.70%, the DAX gained 0.13%, and the CAC-40 dropped 0.22%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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