European shares end week lower on recession fears

European shares tumbled on Friday and posted a weekly loss as the record jump in German producer prices in July added to dismay over the economic outlook for the region’s biggest economy and reignited fears of a recession.

The pan-European STOXX 600 index closed down 0.77% at 437.36 points, with travel stocks at the bottom.

Rising energy prices due to the war in Ukraine pushed up German producer costs in July at the fastest pace on record, both year-on-year and on a monthly basis. Energy prices as a whole are up 105% compared to July 2021.

“European markets seem to have been out of breath this week, startled, in part, perhaps by the big jumps in inflation we saw in the UK consumer price index this week, as well as this morning’s rise in the German producer price index. to July,” said Michael Hewson, chief market analyst at CMC Markets UK.

Money markets are stepping up their bets for the European Central Bank’s rate hikes, moving to fully price a 0.50 percentage point increase in September, compared with a 50% chance forecast of such a move in early August. They also price a small probability of an upward adjustment of 0.75 percentage point at the meeting.

“The European Central Bank will have to keep raising rates, or people will start to question their credibility even more… walking that tightrope,” said Danni Hewson, a financial analyst at AJ Bell.

• In London, the Financial Times index advanced 0.11%, to 7,550.37 points;
• In Frankfurt, the DAX index fell 1.12% to 13,544.52 points;
• In Paris, the CAC-40 index lost 0.94% to 6,495.83 points;
• In Milan, the Ftse/Mib index had a devaluation of 1.96%, to 22,534.57 points;
• In Madrid, the Ibex-35 index registered a drop of 1.09%, to 8,338.10 points;
• In Lisbon, the PSI20 index depreciated by 0.10%, to 6,263.53 points.