European stocks down on virus spread concerns

On Monday European stocks dropped slightly as investors sold economically sensitive sectors on concerns that the spread of new coronavirus variants was impeding a global economic recovery.

The pan-European STOXX 600 index dropped 0.1% after slight opening gains. Banking, mining, travel, and auto stocks dropped between 0.4% and 1.2%, with investors loosening optimistic bets on the global economy as the Delta virus variant spread through large parts of Asia. Commodity-heavy UK shares fell 0.5%, trailing continental European peers.

Volatility increased across global markets last week after U.S. and China data raised worried that economic growth may have peaked, sending government bond prices higher and stocks lower. Still, Wall Street indexes closed at record highs on Friday, while the STOXX 600 remained a few points away from its own peak.

Meanwhile, European Central Bank President Christine Lagarde said the central bank will change its direction on the next policy steps at its next meeting to consider its new strategy and show it is serious about reviving inflation.

ECB’s new strategy allows it to tolerate inflation higher than its 2% goal, meant to soothe investors that policy won’t be tightened too soon. Investors moved into defensive parts of the stock market like utilities, real estate, and healthcare, which gained between 0.3% and 0.9%.

Daily Mail and General Trust Plc inreased 3.8% after it said its largest shareholder, Rothermere family, might take the British newspaper private in a 810-million-pound) deal, if the sales of its insurance risk unit and Cazoo business go through.

France’s outdoor advertising company JCDecaux gained 7.3% after JPMorgan upgraded the stock to “overweight”, quoting a sharp pick up in its air passenger numbers. French IT consulting group Atos fell 15.1% to the bottom of STOXX 600 after it reduced fullyear earnings forecast.

MSCI’s broadest index of AsiaPacific shares outside Japan increased 0.7%, after dropping 2.3% last week. Japan’s Nikkei gained 2.2%, and away from a two-month trough touched on Friday, while South Korea added 0.9%. Chinese blue chips rose 1.1%.