European stocks dip led by banks at the end of a strong week

EUROPEAN shares dipped yesterday as another North Korean missile launch softened appetite for riskier banks and miners but still scored their strongest week since July as attractive valuations tempted investors.

The pan-European STOXX 600 and Eurozone stocks both fell 0.3pc, while export oriented FTSE slumped 1.1pc as the pound spiked higher after a Bank of England policymaker opened the door for a possible rate increase in the coming months.

Banks fell 0.9pc after five straight days of gains, showing strain as investors shed the most risky assets, buying defensive sectors such as utilities, up 0.1pc.

But European stocks posted their strongest week in two months, having hit a five-week high on Thursday as they recovered from a summer dip. Investors and analysts said attractive valuations capped losses for the region’s equities.

“North Korea had little impact on markets,” said Valentin Bissat, equity strategist at Mirabaud Asset Management, which upgraded its exposure to European stocks on Monday.

“European equities continue to benefit from solid growth, and US investors also continue to be invested in European equities with more interesting valuation and the positive FX exchange rate that magnifies returns in USD.”

Broker rating changes moved some of the top gainers and losers.

Pharma company Grifols dropped 3.3pc as Kepler Cheuvreux analysts said a recovery in margins could take longer than expected, removing the stock from their Iberian top picks.

They pointed to the weaker dollar weighing on Grifols, which like many European healthcare companies is highly exposed to the United States.

Goldman Sachs strategists downgraded the sector to neutral last week citing its sensitivity to US policies. (Reuters)