Europe midday: Shares turn red on German GDP data, Evergrande woes
European shares turned flat on Thursday despite as more woes from troubled Chinese property developer Evergrande, which hit shares in Hong Kong overnight, hit sentiment, along with downbeat growth data from Germany.
The pan-European Stoxx 600 index was down 0.02%, following losses this week on the back on investor fears over rising interest rates.
Shares in the heavily-indebted property developer Evergrande were suspended in Hong Kong. Trading in the crisis-hit Chinese firm had only resumed last month following a previous 17-month suspension.
While no reason was given for the latest halt, which was requested by the company, it comes amid reports that Evergrande’s billionaire founder and chair, Hui Ka Yan, has been placed under police surveillance.
‘’Cautious sentiment is dominating as oil prices ramp up while investors digest yet more unappetising news about China’s fragile property sector, fuelling worries about contagion in the economy," said Hargreaves Lansdown analyst Susannah Streeter.
"Concerns about tight supplies are fuelling the rise in oil prices, reigniting worries about inflation and the need for interest rates to stay higher for longer. Brent Crude has swept past $97 a barrel as the effect of Saudi Arabia and Russia’s extended production cuts takes hold and data shows a faster than expected drawdown of crude stocks in the United States."
In economic news, Germany’s economy is on course to contract this year, a group of leading economists warned on Thursday.
Publishing their Joint Economic Forecast, Germany’s five economic institutes said GDP was likely to contract by 0.6% in 2023, after growth was dampened by higher interest rates and inflation.
The institutes had initially forecast growth of 0.3% in the spring.
Oliver Holtemoller, vice president and head of the macroeconomics department at the Halle Institute for Economic Research (IWH), said: "The most important reason for this revision is that industry and private consumption are recovering more slowly than we expected in spring."
In equity news, gambling shares were down after 888 Holdings issued a profit warning. Ladbrokes owner Entain, which did similar this week, fell again, while Flutter was also lower.
Reporting by Frank Prenesti for Sharecast.com