European shares slightly higher as business recovery loses momentum

European shares edged higher in thin trading on Friday after data showed Germany’s manufacturing sector rebounded further in August, but gains were capped as overall recovery in euro zone business activity stalled.

The German DAX gained 0.4% after the IHS Markit’s flash composite Purchasing Managers’ index (PMI) showed factory activity gauge rose to 53.0 from 51.0, hitting its highest level in nearly two years. However, activity in services sector unexpectedly came to a near standstill in Europe’s largest economy amid renewed travel restrictions.

Paris-listed shares rose 0.2% after numbers showed French business activity lost more momentum than expected in August. The pan-European STOXX 600 index was up 0.4%, bouncing back after a downbeat outlook from the U.S. Federal Reserve and weak U.S. data sparked a selloff on Thursday.

The blue-chip FTSE 100 slipped 0.2%, hit by a stronger pound even as data showed retail sales surged past their pre-coronavirus level in July, although economists feared the broad recovery could prove temporary.

Despite Friday’s small gains, the STOXX 600 was on course to end the week flat-to-lower as several European countries saw a resurgence in coronavirus cases and doubts about a U.S. recovery also weighed on investor mind. Travel and leisure stocks were the biggest sectoral gainers, up 1.6%, followed by gains in technology and mining indexes.

Irish building and insulation materials firm Kingspan jumped 6.6% after its chief executive said the company saw significant pent up demand post-lockdown. Swiss drugmaker Novartis gave the biggest boost to the STOXX 600 after it won U.S. health regulator’s approval to repurpose an 11-yearold blood cancer drug against multiple sclerosis.

Asian markets had opened lower after data showed an unexpected rise of more than 1 million in new U.S. claims for unemployment assistance, which reinforced the Fed’s warning on Wednesday about the slackening of the labor market as coronavirus cases rise.

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.