European Stocks Edge Lower; M&A Deals Temper Losses

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Investing.com – European stock markets drifted lower Friday, amid concerns about the economic recovery as a resurgence in the coronavirus weighs. A number of M&A deals has helped temper the losses.

At 3:40 AM ET (0740 GMT), the DAX in Germany traded flat, the CAC 40 in France fell 0.1% and the U.K.’s FTSE index was down 0.3%. 

U.K. retail sales rose 0.8% on the month in August, data showed Friday, slightly better than the 0.7% predicted, but still a sharp slowdown from the 3.7% growth seen in July. This follows the pattern seen in the U.S. Thursday, as employment and housing data pointed to a slowdown in the country’s economic recovery.

While a rebound of sorts is underway in Europe as lockdown restrictions have been eased and businesses reopened, France, Spain and the U.K. among others are grappling with a virus resurgence.

That is raising the very real possibility of renewed restrictions and lockdowns.

“A flaring in the number of Covid-19 infections over the summer months has made it very clear that if there is no effective vaccine, growth will be handicapped,” said Peter Vanden Houte, chief economist at ING.

Investors are still fretting over the Federal Reserve’s decision not to add additional stimulus while Congress argues over a new relief bill and with the European Union’s 750 billion euro recovery fund only due to kick in next year.

Still, news of potential mergers and acquisitions within the region has helped the tone.

Covestro (DE:1COV) stock soared 6.7% after Bloomberg reported that buyout firm Apollo Global Management (NYSE:APO) is weighing up the acquisition of plastics manufacturer.

Caixabank (MC:CABK) gained 0.8% after its acquisition of state-owned lender Bankia (MC:BKIA), down 2%, was approved by both boards, potentially creating Spain’s biggest domestic bank. That comes as their two biggest rivals, Banco Santander (MC:SAN) and BBVA (MC:BBVA), both plumb 52-week lows.

Additionally, the London Stock Exchange (LON:LSE) rose 0.6% after it revealed it had entered into exclusive discussions with Euronext (PA:ENX), which gained 4.2%, in relation to the sale of the Borsa Italiana group.

Elsewhere, Man Group (LON:EMG) rose 0.7% after saying it will start a new share-buyback program of up to $100 million.

Oil prices climbed Friday, with the complex set for its best week since June on the back of strong words from Saudi Arabia about adherence to agreed production cuts and reduced U.S. stockpiles.

U.S. crude futures traded 1.2% higher at $41.47 a barrel, while the international benchmark Brent contract rose 1.1% to $43.78. Both benchmarks have seen gains of over 9% this week, the first positive week in three.

Elsewhere, gold futures rose 0.6% to $1,962.35/oz, while EUR/USD traded 0.1% higher at 1.1852.