European shares extend losses as hot US payrolls flare rate worries (updated)

doValue

07/06/2024 14:25

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      Real estate, utilities lead losses
    

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      STOXX down 0.5%, though set for weekly gains
    

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      doValue gains after entering binding agreement to buy
Gardant
    

  
 (Updated at 1257 GMT)
    By Shristi  Achar A and Shashwat Chauhan
       June 7 (Reuters) - European shares extended losses on
Friday, dragged down by rate-sensitive sectors such as real
estate after a hotter-than-anticipated U.S. jobs report fanned
worries the Federal Reserve would not cut interest rates anytime
soon.
    The continent-wide STOXX 600  .STOXX  was last down 0.5%,
hitting session lows after the data, but is poised to clock its
first weekly gain in nearly a month.
     A report from the U.S. Labor Department showed job growth
increased far more than expected in May, which is likely to keep
the Fed from starting to cut interest rates at least until
September. 
    "(The NFP) were surprising on the upside, but the
unemployment numbers narrate a different view," said Eugenio
Aleman, chief economist at Raymond James.
    "We'll have to wait and see what the next couple of months
look like because the Fed is not going to relent to lowering
interest rates with such a strong labour market."
    Real estate  .SX86P  led sectoral losses with a near 3%
drop, dragged down by a 6.9% fall in German real estate group
Vonovia  VNAn.DE  on a Morgan Stanley rating downgrade.
    Most STOXX 600 sectors traded lower, with utilities  .SX6P ,
which is also a rate-sensitive sector, shedding 1.6%.
    Government bond yields across the continent also perked up
following the data, with the yield on the 10-year bund
 DE10YT=RR , considered as the region's benchmark, last at
2.619%. 
    The data comes at the heels of the European Central Bank's
rate verdict on Thursday when it delivered a 25-basis-point rate
cut, its first since 2019, and joined its counterparts in
Canada, Sweden and Switzerland in easing the monetary policy. 
    The central bank, however, provided little clues about the
future interest rate path, causing traders to scale back bets of
additional rate cuts. 
    Finnish ECB policymaker Olli Rehn said in a blog post that
inflation will continue to decline and interest rate cuts will
support economic recovery, while Bundesbank President Joachim
Nagel said the ECB was not on autopilot mode and was still
acting restrictively despite the cut.
    Among individual stocks, Temenos  TEMN.S  added 3% after the
Swiss banking software firm announced a new share buyback
programme of up to 200 million Swiss francs ($224.92 million). 
    Italy's biggest bad loan company doValue  DOVA.MI  advanced
4.5% as the company was set to acquire rival Gardant in a deal
that includes 230 million euros ($250.59 million) in cash and
the rest in stock.
    

 (Reporting by Shristi Achar A, Shashwat Chauhan and Purvi
Agarwal in Bengaluru; Editing by Janane Venkatraman, Sohini
Goswami and Krishna Chandra Eluri)
 ((Shristi.AcharA@thomsonreuters.com
https://twitter.com/ShristiAchar;
Shashwat.Chauhan@thomsonreuters.com))