Europe close: Markets end volatile week on a mixed note

European stocks struggled for direction on Friday as investors erred on the side of caution following a turbulent week and ahead of a gathering of central bankers at Jackson Hole in the US.

The benchmark Stoxx Europe 600 index climbed 0.28%, while Germany’s DAX fell 0.17% and France’s CAC was 0.36% higher.

The euro was down just over 0.15% against both the dollar and the yen but gained 0.14% against the pound, while Brent crude built on Thursday’s gains and rose 3.27% to $49.17 a barrel.

Oil stocks jump

In company news, most of the winners were concentrated in the oil sector, with Statoil ASA jumping 3.77%, while Total SA gained 2.49% and Royal Dutch Shell up 2.52%. Drillship company Seadrill surged 13% after its second-quarter earnings beat expectations.

A notable faller was French luxury goods maker Hermes, down 2.30%, despite the company reporting a 20% jump in first-half operating income.

Most key Asian stocks closed in the black after a turbulent week where China became the centre of a global selloff, with the Shanghai Composite climbing 5.4%, while Japan’s Nikkei gained 3.02%.

“European shares falling after those in China rose by over 4% could mean that we are shifting back toward low correlation between western and Chinese markets,” said CMC Markets’ analyst Jasper Lawler.

“More likely though, investors don’t have the stomach to hold onto gains heading into the weekend so the rally is running out of steam.

“Investors’ poor appetite for stocks is backed up by the largest weekly equity fund outflows since records began in 2002.”

Despite the heavy losses seen this week and ongoing concerns over a slowdown in China, Credit Suisse said in an equity strategy note that it remains constructive on European equities, which it rates at ‘overweight’.

“We see global growth modestly accelerating, further supported by European data releases over the past week,” said Credit Suisse.

“Moreover, further slowdown in China would, in our view, result in more monetary easing globally and no rate hike in the US this year.”

Friday data

Figures released earlier on Friday, showed Europeans’ confidence in the economy improved a touch in August despite manufacturers’ worries about their order books and the levels of inventory they were holding.

Meanwhile, the European Commission's gauge of economic sentiment for the Eurozone improved from 104.0 to 104.2.

Across the Atlantic, personal income rose 0.4% in July, in line with expectations, while personal consumption expenditures increased by 0.3% over the month compared with consensus for a 0.4% reading.

Economic sentiment, however, edged lower, with the University of Michigan confidence indicator declining unexpectedly in August.

The index dropped from 92.9 to 91.9, against expectations for a 93.1 reading.

The Jackson Hole central bankers’ summit, which gets underway in Wyoming on Saturday, will also be weighing on investors’ minds, as they look for clues over the timing of a first rate hike by the Federal Reserve.