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23 Jun 2022 | 17:54

Europe close: Economic fears hit stocks, bolster government bonds

(Sharecast News) - European markets finished near their session lows on Thursday after the release of a spate of weaker-than-expected Purchasing Managers' Indices for euro area factory and services activity. "After yesterday's falls European markets were already looking vulnerable over rising concerns about a global slowdown," said Michael Hewson, chief market analyst at CMC Markets UK.

"These fears have been further exacerbated after the latest flash PMIs from Germany and France pointed to further economic weakness in June, raising the prospect that both economies could well be sliding into recession."

The pan European Stoxx 600 index was down 0.82% to 402.40, alongside a 1.76% drop on the German Dax to 12,912.59.

The S&P Global flash eurozone composite purchasing managers' index - which measures activity in both the services and manufacturing sectors - fell to 51.9 from 54.8 in May, coming in below consensus expectations for a reading of 54.0.

A reading above 50.0 indicates expansion, while a reading below signals contraction.

One small silver lining perhaps, according to the survey compiler: " with business expectations now the lowest since May 2020, the next few months will be a true test for how sustainable this capacity building will be."

Hence the 16 basis point decline in the yield on benchmark 10-year Italian Gilts for instance.

In equity news, shares in Polymetal bucked the trend and were up sharply, despite saying it was still struggling to establish new sales channels for silver bullion, resulting in lower cash-flow generation. However, gold sales from its Russian mines to Asian markets had returned to a regular schedule after a significant coronavirus-related slowdown in April and May.

Shares in European real estate investor Aroundtown fell 7% after a downgrade to 'sell' by JP Morgan.

Shares in ecommerce group THG jumped after Citi resumed coverage with a 'buy' rating and 220p price target.
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