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Stocks - Europe Slips Amid Fresh Coronavirus Worries

By Peter Nurse - European stock markets weakened Wednesday, with investors fretting about the increasing number of coronavirus cases worldwide amid fears this will lead to the reintroduction of generalized lockdown measures.

At 3:30 AM ET (0730 GMT), the DAX in Germany traded 0.8% lower, France's CAC 40 fell 0.6%, the U.K.'s FTSE index was down 0.7%.

Stocks in Europe have rallied hard since hitting a low in March, with gains driven by fiscal and central bank stimulus around the globe and a gradual easing of restrictions.  The U.K. announced a major relaxation of restrictions on its crucial service sector on Tuesday.

However, fears are mounting that the removal of these restrictions may have come too quickly and a second wave of the Covid-19 virus is on its way. 

German Health Minister Jens Spahn on Wednesday stressed that the coronavirus remains a risk after the western German state of North Rhine-Westphalia on Tuesday put two municipalities back into lockdown following an outbreak at a meatpacking plant.

Still, there remains some optimism about the economic recovery, particularly after Tuesday’s upbeat business surveys, with France a stand-out as lockdown loosening there led to a modest return to growth.

“To some extent, this is obviously a technical rebound. The fact that PMIs are still in contractionary territory illustrates the two messages: a sense of relief that a sharp rebound is possible but at the same time caution against too much optimism,” said analysts at ING, in a research note.

The key economic indicator due for release Wednesday will be the influential German Ifo Business Climate survey for June, at 4:00 AM ET (0800 GMT), which is seen recovering. 

The French index for business confidence surged 18 points to 78, earlier Wednesday, the sharpest increase on record, statistics agency Insee said. 

In corporate news, Dufry (SIX:DUFN) stock climbed 1.5% after the Swiss-based travel retailer said it would slash staffing costs to reflect previously forecast hefty potential sales declines on the back of the coronavirus pandemic.

Atos (PA:ATOS) stock climbed 0.8% after the French information-technology company confirmed its goals for 2020, while maintaining its dividend.

Nokia (NYSE:NOK) stock climbed 0.5% after the Finnish telecom equipment maker announced its new chief executive Pekka Lundmark will join the company on August 1, a month earlier than planned.

Oil edged higher Wednesday, consolidating after losses caused by a second consecutive week of increases in U.S. crude supplies.

The American Petroleum Institute estimated a build of 1.749 million barrels for the week ended June 19 on Tuesday, much bigger than the 300,000 barrel build expected. Attention now turns to the government figures due at 8:30 AM ET (1230 GMT), where a small build is expected.

At 2 AM ET, U.S. crude futures traded 0.1% higher at $40.42 a barrel. The international benchmark Brent contract rose 0.84 to $42.80.

Elsewhere, gold futures rose 0.2% to $1,785.55/oz, while EUR/USD traded at 1.1300, down 0.1%.



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