European stocks set for worst drop in five weeks as rate worries resurface

By Thomson Reuters May 24, 2024 | 2:25 AM

(Reuters) – European stocks lost ground on Friday, set for their biggest percentage drop in more than five weeks, as signs of persistent U.S. price pressures and a recovering euro zone economy dashed hopes of interest rate cuts from major central banks this year.

The pan-European STOXX 600 index was down 0.7%, as of 0710 GMT.

U.S. stocks closed sharply lower on Thursday as an initial euphoria following upbeat outlook from chip giant Nvidia faded after economic data showed inflation was still a concern, potentially delaying any Federal Reserve rate cuts.

The German two-year bond yield hit its highest in six months on Thursday after a survey showed euro zone business activity has expanded at its fastest pace in a year this month. It traded just below those levels on Friday. [GVD/EUR]

Europe’s rate-sensitive technology shares took the biggest hit, down 1.4%, followed by utilities and banks.

Shares of Renault rose 2.4% after the French carmaker announced a share buyback plan and UBS upgraded the stock to “neutral” from “sell”.

Britain’s National Grid rebounded nearly 8% after Thursday’s more than 10% plunge when it announced plans to raise about 7 billion pounds ($8.9 billion).

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips)