European shares suffer worst week in 2 months; tech, retail fall



(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* STOXX 600 down 4.5% for the week

* Europe's retail index hits two-year low

* U.S. jobs grow more than expected in April

By Shreyashi Sanyal and Sruthi Shankar

May 6 (Reuters) - European shares chalked up their worst week in two months on Friday, with tech stocks and retailers feeling the brunt of selling on the prospect of bigger interest rate hikes to tame decades-high inflation.

The pan-European STOXX 600 index .STOXX fell 1.9%, with retailers .SXRP down 2.0% and technology stocks .SX8P off 2.4%.

The retail index hit its lowest in two years after a string of weak earnings reports that highlighted the fallout from surging inflation, the Ukraine war and a fresh round of lockdowns in China.

Adidas ADSGn.DE dropped 3.6% as it lowered expectations for 2022 sales, with renewed COVID-related lockdowns in Greater China hitting the German sportswear company.

Tech shares took cues from declines in growth stocks on Wall Street, which were dragged down by elevated U.S. Treasury yields.

Data showed stronger-than-expected U.S. jobs growth, exacerbating fears of bigger interest rate hikes by the Federal Reserve.

The European Central Bank (ECB) is expected to raise interest rates later this year, with some analysts expecting a hike as early as July after recent record euro zone inflation readings.

"We agree with investors that the ECB is likely to raise interest rates by 25 bp (basis points) in July," said Jack Allen-Reynolds, senior Europe economist at Capital Economics, warning the worst is yet to come for the euro zone economy.

"Shortages are likely to continue weighing on activity and higher inflation will eat further into real incomes."

Meanwhile, a recession warning from the Bank of England weighed on UK stocks.

Oil & gas stocks .SXEP were among the few gainers in Europe, up 0.5% as crude prices traded above $110 a barrel ahead of an impending European Union embargo on Russian oil.

Among other companies reporting results, ING Groep NV INGA.AS , the largest Dutch bank, fell 4.7% as it posted worse-than-expected quarterly net income, including a surge in provisions for bad loans due to its exposure in Russia and Ukraine.

Danish medical device maker Ambu AMBUb.CO tumbled 11.8% after providing a downbeat forecast for full-year earnings due to supply-chain issues and hospital labour shortages.

Spanish pharmaceuticals company Grifols GRLS.MC gained 9.4% as it reported the volumes of blood plasma it collected reached pre-pandemic levels in the first quarter.
Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru Editing by Sriraj Kalluvila and Mark Potter

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.