European stocks dropped on Thursday, marking a second consecutive daily loss, after economic data for the eurozone fell short of expectations.
The Stoxx Europe 600 SXXP, -0.44% lost 0.4% to end at 407.18, with only the oil and gas SXEP, +0.34% and telecom sectors edging higher. Among individual shares, Ericsson AB ERICB, -9.99% sank 9.9% after the Swedish telecom-equipment maker said higher operating costs contributed to weaker-than-expected first-quarter profit.
Germany’s DAX 30 DAX, -1.21% dropped 1.2% to 11,723.58, its biggest decline in nearly a week. Losses deepened after preliminary figures from data-firm Markit showed private-sector activity growth in Germany—Europe’s largest economy—softened slightly in April.
Markit’s April flash manufacturing purchasing managers index for Germany hit a two-month low of 51.9, missing expectations for a 53.0 reading from analysts polled by FactSet. The flash services-activity index reached a three-month low of 54.4, below a projection of 55.3.
While the April data are consistent with further economic growth at the start of the second quarter, “it will be interesting to see whether weaker new-order growth and increased prices will result in a further slowdown of output expansion, or whether the German economy will regain momentum in coming months,” said Markit economist Oliver Kolodseike in his report.
Other Markit preliminary data showed growth slowed in France’s private sector in April. In Paris, the CAC 40 PX1, -0.62% fell 0.6% to 5,178.91. Separately, Spain’s unemployment rate edged up to 23.8% in the first quarter, from 23.7% in the previous quarter. Spain’s IBEX 35 IBEX, +0.23% managed to turned higher, ending up 0.2% at 11,425.80.
On Thursday, European Central Bank board member Peter Praet said the eurozone is on track to get back to economic growth, as the central bank’s monetary policies begin to take hold. The ECB last month launched a €1.1 trillion bond-buying program aimed at boosting inflation and invigorating economic growth in the eurozone.
Euro: The euro EURUSD, +1.08% meanwhile, was able to move higher after the soft PMI reports, trading at $1.0806 versus $1.0726 late Wednesday in New York.
Craig Erlam, senior market analyst at Oanda, said “quite a lot of the move is technical,” as the euro recovered ground after falling back to Tuesday’s low around $1.0660. The euro pushed into the $1.08 after U.S. weekly jobless claims rose more than expected.
Erlam said the euro also appeared to find support as Greek Prime Minister Alexis Tsipras was due to meet with German Chancellor Angela Merkel in Brussels on Thursday to discuss Greece’s debt troubles. “These talks may…be a sign that a deal is possible because if these people are having a discussion, than clearly they are trying to work toward a positive outcome,” said Erlam.
Cash-strapped Greece and its creditors have so far been unable to work out an agreement that would lead to Greece getting its next tranche of bailout funds. Eurozone finance ministers will meet Friday to discuss Greece, but hopes for a deal remain low.
Overall, the shared currency “remains in a downward trend,” said Erlam.
Greek stocks were higher Thursday, with the Athex Composite Index GD, +2.39% closing up 2.4% at 736.60.
In London, the U.K.’s FTSE 100 UKX, +0.36% turned higher by 0.4% to 7,053.67. The heavily weighted mining sector fought off losses that had come after HSBC’s Chinese manufacturing activity survey fell to a one-year low of 49.2 in April. China is a major buyer of metals and other commodities.
Back on the DAX, Volkswagen VOW3, +0.99% was one of only six companies whose shares moved higher. The stock rose 1.6% after Canada’s export-credit agency said it would lend Volkswagen €400 million ($430 million) to buy Canadian-made parts for its plants in Tennessee and Mexico.
Meanwhile, Deutsche Bank AG DBK, -0.54% shares turned higher, rising 0.6% after the German banking heavyweight agreed to pay a $2.5 billion fine to settle investigations by U.S. and U.K. regulators into manipulation of interest rates.