European Markets Mixed As UK Data Hint At Brexit Slowdown

LONDON, (UrduPoint / Pakistan Point News - 28th Apr, 2017 ) - European markets traded mixed on Friday with London falling on weaker-than-expected growth data, while Paris and Frankfurt won modest gains as eurozone inflation jumped sharply.

London's benchmark FTSE 100 index lost 0.2 percent in morning trading as official first-quarter data showed a slackening in Britain's crucial service sector had slowed GDP growth to 0.3 percent -- in early signs that the country's post-Brexit boom may be coming to an end.

"With high inflation and slumping consumer demand, there is much to worry about with the UK economy at present," said David Lamb, head of dealing at FEXCO Corporate Payments. Banking giant Barclays weighed down on the index, losing 4.8 percent following the publication of first-quarter results, which showed its investment banking operation "fell short of expectations due to weaker than expected fixed income trading", according to Helal Miah at The Share Centre.

Prospects for British exporters were also hit by the surging pound, which climbed to its highest since late September on Friday, approaching $1.30. Traders are betting on a thumping victory for Theresa May in the upcoming general election, which they believe will help her in Brexit negotiations.

France also posted disappointing GDP growth of 0.3 percent, but Paris's CAC index continued its post-election bounce to gain 0.2 percent as polls showed centrist Emmanuel Macron on course for victory.

The first-round vote had been "a massive relief to markets, which are assuming that Macron is going to win", William Hamlyn, analyst with Manulife Asset Management, told AFP. Germany's DAX also made gains, taking on 0.1 percent, as Eurostat announced that eurozone inflation rose to 1.

9 percent in April, up from 1.5 percent in March.

"Any inflation that's marginally above expectation would help Europe and the reflation story," said Hamlyn. Despite the jump, the European Central Bank has reasserted its commitment to a loose monetary policy.

Focus will soon shift to Washington, where revised growth figures for the first three months of the year are due to be released Friday. The data will be pored over for clues about the Federal Reserve's interest rate plans, with bank officials saying they will make their decisions based on how the world's top economy is faring.

- North Korea tension - ======================= Asian shares earlier fell as doubts deepened over US President Donald Trump's agenda. "The market's distrust in his ability to run the government is only increasing," Mizuho Bank said in a commentary.

"He has not been able to deliver most of his campaign promises. The market has had high hopes for his tax reforms. But the proposal has faced strong criticism from the conservative forces in his party that are demanding more fiscal discipline." Also, there are concerns that Washington lawmakers have yet to pass a bill before Saturday that will prevent a costly shutdown of the US government, with Democrats and Republicans unable to agree even a short-term deal to give them more time.

Tensions over North Korea also continue to dent confidence, after a series of missile launches by Pyongyang and warnings from the Trump administration that military action was an "option on the table". Trump added to concerns by saying there was "a chance" of "a major, major conflict" with the North.