Skyscrapers on the skyline in the financial district of Frankfurt, Germany, on Monday, Nov. 4, 2024.
This was CNBC's live blog covering European markets.
LONDON — European stocks closed higher on Friday, as investors reviewed weak economic indicators from across the region which built expectations for central bank rate cuts.
The pan-European Stoxx 600 index closed 1.18% higher, with all sectors except banks ending in positive territory. Health care and retail stocks led the gains, both up over 2%, while Europe's banking index slipped 2%.
In the U.K., the pound fell to a six-month low against the U.S. dollar following U.K. retail sales data. The country's Office for National Statistics said that retail sales volumes lost 0.7% month-on-month in October, well below economists' expectations of a 0.3% decline.
Get top local stories in Southern California delivered to you every morning. Sign up for NBC LA's News Headlines newsletter.
London's FTSE 100 jumped 1.4% in its best session since early August as investors assessed whether the data — along with weak business activity figures this week — could see the Bank of England cut interest rates more rapidly in the year ahead, despite a recent uptick in inflation.
While market participants broadly expect a BOE hold in December, a 75 basis point reduction in the key rate from the current 4.75% is now fully priced in before the end of 2025.
The euro meanwhile slid against the dollar after PMI data showed that euro zone business activity fell sharply in November. The euro was last seen trading at $1.0397, down 0.73% for the session.
Money Report
S&P Global's HCOB flash composite Purchasing Managers' Index for the euro zone came in at 48.1 in November, down from 50.0 in October and below expectations.
Separate data published Friday showed the German economy eked out 0.1% growth in the third quarter on the previous three months — lower than a preliminary reading of 0.2% for the period.
Asia-Pacific markets mostly rose on Friday, tracking gains on Wall Street that saw the S&P 500 log gains for a fourth straight day.
U.S. stocks were higher in morning deals.
U.S. stocks trade higher
U.S. stocks advanced on Friday as the major U.S. averages headed for weekly gains.
The Dow Jones Industrial Average gained 228 points, or 0.5%. The S&P 500 climbed 0.3%, while the Nasdaq Composite added 0.2%.
All three major averages are on track to end the week higher by more than 1%.
— Alex Harring, Jesse Pound
ECB should cut interest rates by 50 basis points — but they won't, UniCredit's Nielsen says
The European Central Bank should deliver a jumbo interest rate cut of 50 basis points next month, but they won't do it, according to UniCredit's Erik Nielsen.
A sharp drop in euro zone business activity in November has fueled bets the ECB could lower borrowing costs by 50 basis points at its next meeting, although some economists say a 25 basis point cut is more likely.
Asked whether the ECB was poised to deliver a 50 basis point cut in December, Nielsen replied, "No, I don't think so. They should — but they won't."
Nielsen said it is still "too early" to fully absorb the PMI figures, noting that data showing Germany's business activity fell at its quickest rate for nine months in November would be "particularly concerning" for the Bundesbank.
"If this continues, we will get 50 but I don't think [it will happen] in December already," Nielsen told CNBC's "Street Signs Europe."
— Sam Meredith
Europe's banking index down over 2%
Europe's banking index fell 2.2% on Friday, dragged lower by Spain's Banco Santander, Caixabank and Banco Sabadell.
Banco Santander was last seen trading off by nearly 5%, while Caixabank and Banco Sabadell fell 4.6% and 3%, respectively.
— Sam Meredith
Stocks on the move: Games Workshop up 16%, Thales down 6%
Shares of Britain's Games Workshop surged more than 16% on Friday, notching an all-time high after the miniature wargame maker delivered an upbeat trading outlook.
Thales, meanwhile, slumped to the bottom of the Stoxx 600. Shares of the France-based technology and defense company fell over 6% after British and French authorities said they were investigating suspected bribery and corruption at the company.
— Sam Meredith
Economists react to disappointing euro zone PMIs:
ING's Bert Colijn:
"The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it's the latter."
Capital Economics' Andrew Kenningham:
"The big drop in the euro-zone Composite PMI in November suggests that the economy is losing momentum in Q4 and supports our below-consensus growth forecast, but the stickiness of the price components of the survey may dissuade policymakers from stepping up the pace of rate cuts for now.
"Together, the surveys and data released today suggest that our current forecast of 0.2% quarterly GDP growth in Q4 looks too optimistic. But the price components of the PMIs – as well as recent comments by ECB policymakers – suggest that we will have to revisit our forecast of a 50bp rate cut in December if there is not a downside surprise in the November inflation data due next week."
Ballinger Group's Kyle Chapman:
"The euro is decisively breaking through key levels, falling below 1.04 for the first time since the energy crisis in late 2022. Having crossed this threshold, parity is no longer a huge leap. German two-year yields have dropped 15bps as the market has priced in 38bps of easing for December and around 150bps in 2025.
"The modest momentum in the services sector was the one thing buttressing eurozone growth – if that pillar is removed, a recession becomes inevitable, as a recovery in the manufacturing sector is not a near-term possibility."
— Katrina Bishop
Euro slumps to two-year low on weak flash PMI data
The euro slumped to its lowest level against the dollar in two years on Friday after data showed that euro zone business activity fell sharply in November.
The euro was last seen trading at $1.0399, down 0.7% for the session, after slipping to its lowest level since December 2022.
It comes shortly after euro zone business activity was found to have moved back into contraction territory in November.
S&P Global's HCOB flash composite Purchasing Managers' Index for the euro zone came in at 48.1 in November, down from 50.0 in October. Analysts polled by Reuters had expected no month-on-month change.
A reading below 50 indicates a contraction, while one above 50 points to expansion.
The reading boosted expectations for a jumbo interest rate cut from the European Central Bank next month.
— Sam Meredith
Germany's business activity falls at quickest rate for nine months
Germany's business activity fell for the fifth consecutive month and at the fastest pace since February, according to a survey published on Friday.
The S&P Global's HCOB flash composite Purchasing Managers' Index came in at 47.3 in November, down from 48.6 in October. Analysts polled by Reuters had expected no month-on-month.
A reading below 50 indicates a contraction, while one above 50 points to expansion.
"Sustained weakness in manufacturing production was compounded by the first decrease in services activity for nine months," the release from S&P Global said.
"Business expectations meanwhile edged up further from September's recent low, although confidence was still subdued by historical standards amid a backdrop of economic and political uncertainty," it added.
— Sam Meredith
Business activity in France contracts at fastest pace since January, PMIs show
Business activity in France shrunk in November, according to S&P Global's Purchasing Managers' Index, amid a broad decline in new orders.
The composite PMI output index — which encompasses both services and manufacturing activity — fell to 44.8 in November, down from 48.1 in the previous month and below expectations of 48.3, according to a Reuters poll. The contraction was its fastest since January.
A reading below 50 indicates contraction, while one above 50 indicates expansion.
"Weaker demand was a common theme seen throughout company anecdotal responses during November – both commercial clients and households reportedly lowered their interest in French goods and services – and the latest data showed that new order volumes contracted at the steepest pace in four years," the release from S&P Global said.
The business executives surveyed also cited negative expectations for activity over the coming year for the first time since May 2020.
— Katrina Bishop
Sweden's Northvolt files for bankruptcy in the U.S.
Swedish battery maker Northvolt filed for Chapter 11 bankruptcy protection in the U.S., reflecting a major setback to Europe's electrification ambitions.
In a statement published Thursday, Northvolt said the move will allow it to restructure its debt, scale back its business and secure a sustainable foundation for its continued operation.
A partner of major European automakers, Northvolt produces lithium-ion batteries for the blooming electric vehicle industry. In recent months, however, the company has been struggling to stay afloat while navigating a major cost-cutting drive.
— Sam Meredith
Europe markets open firmly in the green
The U.K.'s FTSE 100 index was trading 0.7% higher at 8:20 a.m. London time.
Germany's DAX was up 0.52%, France's CAC was 0.49% higher and Italy's FTSE MIB was up 0.51%.
All sectors were in the green, with tech stocks among the best performers, up 1.1%.
— Katrina Bishop
U.K. retail sales miss indicates a 'slow start to the golden quarter'
Capital Economics said the U.K.'s disappointing retail sales marked a "slow start to the golden quarter, but the outlook is improving."
Ashley Webb, U.K. economist, said the decline in sales could be indicative of concerns about tax rises following Finance Minister Rachel Reeves' tax-and-spend budget.
"But despite those tax rises, we still think a solid rise in real earnings in Q4 will support retail sales volumes in the run up to the crucial festive period," he wrote in a note on Friday.
October's fall in spending was relatively broad-based, he added, with clothing stores reporting the biggest slide in retail sales, down 3.1%.
Looking ahead, Ashley said he expects a "chunky" rise in real earnings in the fourth quarter to support retail sales looking ahead.
"Despite the tax rises announced in the Budget, we still expect the retail sector to contribute to above-consensus consumer spending growth of +0.8% in 2024, +1.3% in 2025 and +1.8% in 2026," he noted.
— Katrina Bishop
Sterling hits six-month low after retail sales slide
The British pound fell to a six-month low against the U.S. dollar following U.K. retail sales data, but has since recouped some losses.
The country's Office for National Statistics on Friday said that retail sales volumes lost 0.7% month-on-month in October, well below economists' expectations of a 0.3% decline, according to a Reuters poll. It follows a rise of 0.1% in September.
Sterling fell to around $1.2555 following the data release, its lowest level since the middle of May.
By 7:38 a.m. London time, the pound had pared some losses, trading down 0.16% at $1.2566.
— Katrina Bishop
German economy ekes out 0.1% growth in third quarter
The German economy expanded by 0.1% in the third quarter on the previous three months — lower than a preliminary reading of 0.2% for the period.
"In the 2nd quarter, economic performance dropped 0.3%, after having risen slightly (+0.2%) in the 1st quarter. Following this generally subdued performance in the first half of 2024, the German economy begins the second half of the year with modest growth," the country's Federal Statistical Office said in a statement.
— Katrina Bishop
CNBC Pro: HSBC names 2 China stock picks for 2025 — and gives one over 70% upside
Chinese markets are "turning a corner" following a series of government stimulus measures, HSBC said, naming its top stock ideas for 2025.
"Mainland China has announced a slew of policies to help ensure that local governments can pay their bills and service debt. This should reduce the risk of an immediate slowdown in growth in mainland China and the market has so far reacted positively to these initiatives," the investment bank's analysts wrote in a Nov. 19 research note.
CNBC Pro subscribers can read more here.
— Amala Balakrishner
European markets: Here are the opening calls
European markets are expected to open higher on Friday.
The U.K.'s FTSE 100 index is expected to open 33 points higher at 8,184, Germany's DAX up 28 points at 19,174, France's CAC up 5 points at 7,221 and Italy's FTSE MIB up 52 points at 33,402, according to data from IG.
— Sam Meredith
