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European Equity Benchmarks Close Mixed; Investors Favor Consumer Goods Over Automotive Stocks

The broad-based major European indices closed mixed in Friday trading as the London exchanged moved higher, while the continental markets ended the session lower.

In economic news, UK government gross debt was GBP1.764 trillion ($2.3 trillion) at the end of the financial year ending March, according to the Office for National Statistics ( ONS ). This is equal to 85.6% of gross domestic product ( GDP ), 25.6 percentage points above the reference value of 60% set out in the Protocol on the Excessive Deficit Procedure set by the European Commission.

General government deficit (or net borrowing) was GBP41.0 billion in the financial year ending March 2018, a decrease of GBP5.9 billion compared with the financial year ending March 2017. This is the equivalent of 2.0% of GDP, 1.0 percentage point below the reference value of 3.0% set out in the Protocol on the Excessive Deficit Procedure.

Meanwhile, UK public sector net borrowing excluding public sector banks was GBP4.1 billion in September, GBP0.8 billion less than in September 2017. It was the lowest September borrowing since 2007. For the current financial year-to-date (YTD) was GBP19.9 billion: GBP10.7 billion less than in the same period in 2017; the lowest year-to-date for 16 years (since 2002). Borrowing in the financial year ending (FYE) March 2018 was GBP39.8 billion: GBP5.7 billion less than in FYE March 2017; the lowest financial year for 11 years (since FYE 2007).

The ONS also reported that private non-financial corporations' net rate of return rose to 12.7% in Q2, from a revised estimate of 12.5% in Q1.

In Germany, the Federal Statistical Office (Destatis) reported that almost 7.6 million people received minimum social security benefits at the end of 2017, a decrease of 3.5% compared with the end of 2016. At the end of 2017, the number of recipients as a percentage of the population amounted to 9.2%. At the end of 2016, nearly 7.9 million people, or 9.5% of Germany's population, received minimum social security benefits.

And in Italy, construction output decreased 0.8% in August, compared to the previous month, according to the Italian National Institute of Statistics (Istat). Despite the month-on-month contraction, the last three months from June to August saw an increase in construction output at 1.7%, which was the third consecutive quarter-on-quarer growth.

When compared with a year earlier, both non-seasonally adjusted index and calendar adjusted index continued to rise in August, increasing by 0.6%. Construction output was up 1.2% (calendar adjusted data) during the first eight months of 2018, compared to the same period in 2017.

In equities, real estate investment trust company Intu Properties led the FTSE into positive territory in London, surging 12.6%, followed by consumer goods company Reckitt Benckiser, and insurance firm Old Mutual, which were up 3.8% and 3.2% respectively. Pharmaceutical company GlaxoSmithKline, and consumer goods company Unilever each closed 3.1% lower, while alcoholic beverage company Diageo climbed 2.9%.

In Frankfurt, airline operator Lufthansa, led the DAX lower, falling 6.1%, followed by tire maker Continental, and industrial group Thyssenkrupp, which lost 4.5% and 4% respectively. Covestro was off 3.8%, while semiconductor company Infineon, and automaker Daimler were down 3.3% and 2%.

In Paris, automotive stocks weighed down the CAC as tire maker Michelin, and auto parts supplier Valeo fell 11.3% and 4.3% respectively, while automobile manufacturers Renault and Peugeot dropped 3.1% and 2.5%. Telecommunications, media, and construction conglomerate Bouygues led all decliners, tumbling 11.9%, while steel and mining company ArcelorMittal, and Schneider Electric lost 3.9% and 2.8% respectively.

The FTSE gained 0.32%, the DAX fell 0.31%, and the CAC-40 lost 0.63%.

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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