European stocks fall on currency strength, trade tensions

The host of what promises to be a turbulent G7 meeting

London (AFP) – European stocks retrenched on Thursday as euro and sterling strength weighed on equity prices, as did palpable tensions ahead of an expected G7 affray over trade.

Optimism on the world economy however, reinforced by bright US data, kept a lid on losses, traders said.

In the eurozone, Frankfurt, Paris and Milan closed lower as euro strength weighed on the earnings prospects of exporters.

Wall Street stocks, meanwhile, managed to extend gains approaching midday in New York, a day after the Nasdaq hit a third straight record following a strong reading on US exports for April, which indicated the world’s top economy is in fine fettle.

G7 leaders will descend on Quebec on Friday and Saturday for a summit dominated by world trade after Donald Trump sparked global fury by imposing steel and aluminium tariffs on Canada, Mexico and the European Union. 

That was met with retaliatory measures from all three.

Canadian Prime Minister Justin Trudeau and German Chancellor Angela Merkel have said they expect tense discussions, while Japanese Finance Minister Taro Aso has referred to the G7 as the “G6+1”, highlighting the growing divisions.

Trudeau said Thursday that Trump’s reasons for imposing steel tariffs were “laughable”, while French leader Emmanuel Macron said governments should not be shy about making deals without Washington.

In currency deals, the euro continued its recovery from last week’s Italy-fuelled plunge, with the European Central Bank’s top economist saying it would discuss winding down its crisis-era stimulus.

The European single currency — which had dallied with $1.15 last week — advanced once again above $1.18 on Thursday after breaching the level the previous day.

“The euro has been one of the biggest movers in the foreign exchange space this week, as rising expectations of a hawkish shift from the ECB next month drive a move into the single currency,” said IG analyst Joshua Mahony.

– Key figures around 1545 GMT – 

London – FTSE 100: DOWN 0.1 percent at 7,704.40 points (close) 

Paris – CAC 40: DOWN 0.2 percent at 5,448.36 (close)

Frankfurt – DAX 30: DOWN 0.2 percent at 12,811.05 (close)

EURO STOXX 50: FLAT at 3,459.77

New York – Dow Jones: UP 0.5 percent at 25,273.85

Tokyo – Nikkei 225: UP 0.9 percent at 22,823.26 (close)

Hong Kong – Hang Seng: UP 0.8 percent at 31,512.63 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,109.50 (close)

Euro/dollar: UP at $1.1824 from $1.1774 at 2100 GMT on Wednesday

Pound/dollar: UP at $1.3428 from $1.3413

Dollar/yen: DOWN at 110.00 yen from 110.18 yen

Oil – Brent Crude: UP $1.60 at $76.96 per barrel

Oil – West Texas Intermediate: UP $1.32 at $66.05