UPDATE 1-European shares lose momentum after early-year rally as retail earnings drag

Retail stocks slipped 1%, snapping a four-day winning streak, while miners fell 1.2% as ‍gold and copper prices eased. DISAPPOINTING EARNINGS SOUR SENTIMENT Shares of AB Foods hit their lowest since April last year and were last down 11.1% after the company warned of lower annual profit due to weak demand at its Primark chain in Europe and subdued U.S. sales at its food business. Britain's competition regulator ⁠will ‌also fast-track its probe of the ⁠company's deal to buy bread brand Hovis, it said on Thursday.

European shares extended ‌losses on Thursday after downbeat retail earnings from some top companies, while softer gold and copper prices pressured market sentiment. The drop has tempered the momentum in the pan-European STOXX 600 ⁠index that hit a string of record highs to kick off 2026, highlighting that the earnings season could be the next crucial test for risk appetite.

The index fell 0.3% to 603.43 by 0930 GMT and was poised for its second consecutive day in ​the red if current levels hold. Retail stocks slipped 1%, snapping a four-day winning streak, while miners fell 1.2% as ‍gold and copper prices eased.

DISAPPOINTING EARNINGS SOUR SENTIMENT Shares of AB Foods hit their lowest since April last year and were last down 11.1% after the company warned of lower annual profit due to weak demand at its Primark chain in Europe and subdued U.S. sales at its food business.

Britain's competition regulator ⁠will ‌also fast-track its probe of the ⁠company's deal to buy bread brand Hovis, it said on Thursday. Greggs, the biggest fast food chain in the UK, warned of subdued consumer confidence. Its ‍stock fell 7.3%, touching its lowest in nearly a month.

On the other hand, Marks & Spencer shares rose 3.4% following its earnings. The company reported ​strong demand for its upmarket food at Christmas, but shoppers spent less on fashion, home and beauty in its ⁠stores. "That's going to disappoint a lot of people, as the past few years suggested that M&S had finally cracked the right formula to look smart with clothing," ⁠said Dan Coatsworth, head of markets at AJ Bell.

Swedish fashion retailer H&M fell 3.9% and was the biggest laggard on the European retail index. Meanwhile, investors are not overly concerned with the Venezuela fallout; a steady flow of headlines has added ⁠some unease, leaving traders split between buying and reducing risk.

"When investors have decided that geopolitics is not relevant from a global ⁠macro perspective, they've looked past it. ‌But that may not always be the case," said Richard Flax, chief investment officer at wealth management firm Moneyfarm. The STOXX aerospace and defense index touched an all-time high after U.S. ⁠President Donald Trump called for higher defence spending.

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