Article Highlights

  • STOXX down 0.6 percent
  • Germany's DAX hit by weak data, trade jitters
  • Italian banks slump as govt bonds under new pressure
  • Gucci owner Kering recovers as analysts lift targets
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European shares fell on Friday as worries over global trade and an economic slowdown in the region weighed ahead of a European Central Bank meeting next week that could signal plans to wind down a massive monetary stimulus.

Losses among most sectors pushed the STOXX 600 index down 0.6 percent by 0908 GMT, while Germany’s DAX index, the most exposed to souring trade relations, fell 1.1 percent after data added to signs that Europe’s largest economy started the second quarter on a weak footing.

“It looks that the slowdown in Europe is something more serious than previously thought,” said Giuseppe Sersale, portfolio manager at Anthilia in Milan.

He said prospect for European equities were not particularly bright given the weakening economy and the possibility the ECB could debate whether to gradually unwind bond purchases.

Italy’s FTSE MIB fell 1.7 percent as unease about the new government’s spending plans put fresh pressure on the Italian government bonds. Italian banks , which have a big sovereign debt exposure, slumped 2 percent.

“Italian turbulence is a problem but the ECB appears to be ignoring it and willing to go ahead with policy normalization… It’s a bit risky,” said Anthilia’s Sersale.

Elsewhere in the banking sector, Deutsche Bank fell 1.4 percent.

The German bank downplayed the idea that a deal with rival Commerzbank could materialize soon, after Bloomberg reported that top shareholders had been consulted about a potential tie-up.

Commerzbank fell 2 percent.

Kering was a rare bright spot, up 2.1 percent as several price target upgrades helped shares in the luxury group recover from a heavy drop suffered on Thursday on worries that margins and growth in the sector may have peaked.

At an investor day on Thursday Kering said it aimed to reach 10 billion euros in annual sales for its key Gucci brand.

“Kering remains our top pick in the luxury goods sector as we believe there is much more to the story than just Gucci, thanks to the growth opportunities of smaller brands and M&A potential,” said Berenberg analysts said in a note.

Shares in BT Group rose 0.8 percent, outperforming the broader market, after news its chief executive Gavin Patterson would step down later this year.