European shares end flat as virus cases rise, logs weekly gains
German shares rose 0.2%, while France's CAC 40 index gained 0.3% after having risen to an eight-month high earlier this week. Despite rallying more than 40% since a coronavirus-driven crash in March, the STOXX 600 is down about 7% this year on concerns that the second round of lockdowns would threaten a nascent economic recovery.Reuters | London | Updated: 13-11-2020 23:29 IST | Created: 13-11-2020 23:13 IST
European shares ended flat on Friday as surging coronavirus cases compounded fears of the damage to the bloc's economy in the coming winter months, although the benchmark index clocked its second straight week of gains. The pan-European STOXX 600 edged 0.01% higher after jumping earlier this week on optimism around a working COVID-19 vaccine. The index has gained 12.5% in the past two weeks, also buoyed by hopes of calmer global trade under U.S. President-elect Joe Biden.
"Even if the greater likelihood of a vaccine has brightened prospects for next year, the near-term economic outlook is still very gloomy," said Jessica Hinds, Europe economist at Capital Economics. "Much of the euro-zone is yet again subject to substantial restrictions on daily life that are taking their toll on economic activity, particularly in parts of the services sector."
German Health Minister Jens Spahn said it was too early to say whether restrictions imposed last week would need to be extended beyond November, while French Prime Minister Jean Castex said there would be no easing for at least two weeks. German shares rose 0.2%, while France's CAC 40 index gained 0.3% after having risen to an eight-month high earlier this week.
Despite rallying more than 40% since a coronavirus-driven crash in March, the STOXX 600 is down about 7% this year on concerns that the second round of lockdowns would threaten a nascent economic recovery. The U.S. S&P 500, in contrast, has risen 9.5% so far in 2020. With the euro zone likely heading back into recession this quarter, the European Central Bank has already said it would provide more stimulus in December.
European banking stocks outperformed major sectors by surged 16.5% this week, while travel stocks, which have lost 25% of their value so far this year, ended their second week higher. Technology stocks, which have tracked a surge in their U.S. peers as investors gravitate toward sectors that have seen higher demand in this year's stay-at-home environment, gained 0.3% on Friday.
In company news, French power group EDF gained 0.4% as it showed signs of improving performance in the third quarter, while German property group Deutsche Wohnen fell 1% after its third-quarter earnings update. Overall, quarterly results for STOXX 600 companies have been better than expected, with 68% of the firms that have reported results so far beating analysts' earnings estimates, according to Refinitiv data.
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