U.S.-China tensions hit European stocks

European shares were trading largely flat on Friday after their Asian peers were hit by an escalation in U. S.China tensions, but an upbeat earnings season and hopes of more stimulus kept most regional indexes on course for weekly gains.

The pan-European STOXX 600 index opened lower before trading flat, with growthexposed cyclical sectors like banks, automakers and oil and gas firms handing back some of this week’s steady gains.

U. S. President Donald Trump on Thursday moved to ban U. S. transactions with popular Chinese apps, Tencent’s WeChat and ByteDance’s Tiktok, calling them “significant threats.” The news knocked 1% off Asia- Pacific shares, while Amsterdam- listed Prosus with its biggest investment in Tencent fell 4.7%.

In a note to clients, Citi analysts said they viewed Trump’s moves as less “significant than the consulate closure two weeks back and continue to expect China to stay restrained in terms of a retaliation.”

Markets, however, appeared to be in a holding pattern ahead of U. S. jobs data, due for release later in the day, while also awaiting a new stimulus package to prop up the world’s largest economy.

Despite concerns over rising coronavirus cases in parts of Europe and uncertainty about a U. S. recovery, the STOXX 600 was on course for a weekly gain as more companies exceeded analysts’ beaten-down expectations for second- quarter earnings and economic data continued to improve in Europe.

Deutsche Telekom, which owns 43% of T- Mobile, rose 2.6% after the U.S. firm added more monthly phone subscribers than expected in the second quarter. The broader telecoms index rose 1%.

UK’s Hikma Pharmaceuticals jumped 10.4% after saying it has started manufacturing remdesivir, an approved treatment for COVID- 19 from U. S.- based Gilead and it raised its annual sales outlook for two of its biggest divisions.

Aero- engineer Rolls- Royce Holdings dropped 3.2% after a media report that activist shareholder ValueAct Capital Management sold its stake in the company.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.