Europe midday: Stocks drop; travel and leisure under pressure after Nice attack

European equity markets fell on Friday, with travel and leisure issues under pressure following a terror attack in Nice.

At midday, the benchmark Stoxx Europe 600 was down 0.5%, Germany’s DAX was off 0.6% and France’s CAC 40 was 0.8% weaker.

At the same time, oil prices were in the red again amid worries about a supply glut. West Texas Intermediate was down 0.7% at $45.38 a barrel, while Brent crude was 0.6% lower at $47.07.

Accendo Markets’ Mike van Dulken said: “The subject of terrorism is sure to dominate headlines today, with attention also sure to focus on what this means for the evolving shape of the political landscape in France and the US (Le Pen, Trump sure to gain more support), not to mention how the UK views this in light of having just voted to leave the EU.”

On Thursday night, a man drove a truck into a crowd of revellers who were celebrating Bastille Day in Nice, France, leaving at least 84 people dead and around 18 in critical condition. The attacker – a 31-year old French-Tunisian who was known to police but not on the terrorism watch list – was killed, and President Francois Hollande has now extended the state of emergency by a further three months.

Travel and leisure stocks were under pressure after the attack, with French hotels group Accor and airlines EasyJet and Air France-KLM all in the red. Meanwhile, the Stoxx 600 travel & leisure index was down 1.4%.

In individual company news, Swatch shares tumbled after the Swiss watch maker reported a large drop in first-half profit.

Swedish clothing retailer Hennes & Mauritz edged higher after it said sales rose 8% in June, beating analysts’ expectations.

Elsewhere, Monsanto was trading up after German drug and agrichemical company Bayer sweetened its offer for the company by $3 to $125 per share.

On the data front, Eurostat confirmed in its final estimate that inflation in the euro bloc rose in line with expectations in June at an annualised 0.1% compared to a 0.1% drop the month before.

Low fuel and gas prices continued to provide a drag on inflation, offsetting increased prices at restaurants, cafes, rents and tobacco.

Also on Friday, investors were sifting through Chinese data releases. Figures from the National Bureau of Statistics showed the world's second-largest economy expanded by 6.7% on the year, steady from the previous quarter and a touch ahead of economists’ expectations of 6.6% growth.

Compared to the first quarter, gross domestic product was up 1.8%. The Chinese government has a growth target of 6.5% to 7% for this year.

“We can thank the continuous efforts by the People’s Bank of China, which introduced various different stimulus measures to achieve that figure,” said Naeem Aslam, chief market analyst at Think Markets.

Other data from the National Bureau of Statistics showed industrial production in China rose 6.2% in June from a year earlier, up from 6.0% growth in May.

Meanwhile, fixed-asset investment rose 9% year-on-year between January and June down from 9.6% growth in the first five months of the year.

Retail sales were up 10.6% in June compared to the year before, up from a 10% rise in May.

Still to come, investors will watch out for an avalanche of US data releases. Empire manufacturing, the consumer price index and retail sales are all out at 1330 BST. US industrial production is at 1415 BST, while business inventories and University of Michigan consumer sentiment are at 1500 BST.