Europe close: Equities decline after disappointing GDP data

European stocks ended the week on a downbeat note as data showed growth in the Eurozone unexpectedly slowed in the third quarter, and investors mulled the possibility of a US rate hike next month.

The benchmark Stoxx Europe 600 index closed down 0.82%, while Germany’s DAX lost 0.69% and France’s CAC 40 fell 1%.

Eurozone GDP figures disappoint

Figures released by Eurostat showed gross domestic product in the Eurozone grew 0.3% month-on-month in the third quarter compared with a 0.4% gain in the previous three months and missing analysts’ expectations for an unchanged reading.

On a year-on-year basis, GDP grew 1.6%, slightly better than the 1.5% gain posted in the previous quarter but short of the expected 1.7% figure.

“The latest official growth data from Europe suggests a slowdown in activity, but a reasonably robust and stable recovery,” said Azad Zangana, senior European economist at Schroders.

“There is little here to cause alarm, and would not be enough to trigger any major change in monetary policy.

“The case for more stimulus has weakened, especially as markets have increased bets on the Federal Reserve raising its policy interest rate in December.”

Individual GDP data showed that France’s economy returned to growth in the third quarter, while Germany’s slowed down as exports and investment declined sharply.

Across the Atlantic, according to data released by the US Commerce Department, retails sales grew 0.1% last month compared with a 0.1% gain in the previous month falling short of analysts’ expectations for a 0.3% rise.

That, however, was not enough to prevent the dollar from extending its weekly gains against the euro, which lost 0.70% against the greenback.

As of 1635 GMT, the European currency was down 0.52% and 0.56% against the pound and the yen respectively, while Brent crude lost 0.64% to $43.78 a barrel.

“When the dollar rises even after poor economic news, it is a clear sign that markets have concluded that a rate hike is on its way,” said IG’s senior market analyst Chris Beauchamp.

Rolls-Royce remains under the cosh

In company news, aerospace and engineering firm Rolls-Royce lost 3.97%, suffering losses for a second day running after it said on Thursday that earnings for the year will be at the low end of guidance as it downgraded its expectations for next year and warned of a possible dividend cut.

Roche slid 0.34% after the Swiss drug maker said it will stop manufacturing at four sites in Europe and the US, putting up to 1,200 jobs at risk.

Shares in Syngenta surged 5.41% following media reports the agricultural company was offered $42bn in a takeover offer by ChemChina, which was then rejected.

French telecommunications company Bouygues slid 0.32% despite posting a rise in third quarter operating profit and confirming its 2015 targets.