Europe stocks sink in global selloff

LONDON

European stocks sank after heavy losses elsewhere, as fears over rising US interest rates and China's Covid outbreak overshadowed news of the re-election of French President Emmanuel Macron.

In early deals, the Paris CAC 40 index lost 1.2 percent to 6,505.60 points and Frankfurt's DAX dropped 0.9 percent to 14,014.90, trimming initial falls.

Outside the eurozone, London's FTSE 100 shed 1.5 percent to 7,409.08 compared with the closing level on Friday.

"Despite some political relief in Europe after Macron's victory, European markets have been overshadowed by broader macro concerns and (are) taking their cues from the sharp sell-off on Wall Street on Friday and in China overnight," said Interactive Investor analyst Victoria Scholar.

Shares in European airlines took off Thursday after United Airlines forecast surging travel demand as the pandemic impact fades on the aviation sector.

British Airways parent IAG and low-cost rival EasyJet saw their share prices soar by about six percent nearing midday in London.

France's Air FranceKLM stock jumped around four percent in early afternoon deals in Paris and Germany's Lufthansa gained a similar proportion in Frankfurt.

Overnight, US carrier United Airlines forecast "the strongest second-quarter revenue guidance in company history" despite logging another Covid-induced loss for the first quarter.

The news also sent United shares leaping in after-hours trade.

"The European aviation sector is benefitting from the general improving sentiment related to the pandemic recovery which has clearly helped restore faith in some of the most hit segments of the economy," XTB analyst Walid Koudmani told AFP.

"After what has been a very difficult few years for the aviation industry, as a result of lockdowns and alarming inflation, United Airlines' outlook certainly inspired some confidence."

The aviation sector was ravaged by the Covid crisis that erupted in early 2020, decimating demand and grounding planes worldwide.

United's outlook helped spark bumper gains on the Frankfurt and Paris stock exchanges on Thursday.

Asian markets dipped in early trade Friday after a negative lead from Wall Street, with investors around the world worried about surging inflation.

Central banks in several major economies including the United States, Canada and Britain have already started raising interest rates to contain prices, but the European Central Bank on Thursday kept its stimulus plans and rates unchanged.

That sent the euro plunging to a near two-year low, but eurozone stocks were boosted, but Wall Street retreated ahead of the Easter holidays.

The mood was subdued in Asia too, where only a handful of markets were open on Good Friday.

The Nikkei 225 slid 0.7 percent with Wall Street's woes depressing sentiment.

The Tokyo market is likely to be "dominated by sell orders as investors are disheartened by falls in US shares," Mizuho Securities said in a note.

Shanghai dropped 0.2 percent.

Russia's invasion of Ukraine has added to the uncertainty about the global economic recovery from the Covid-19 pandemic.

This was reflected in statements from major banking executives in the United States, who described the American economy as solid but warned about the impact of the Ukraine conflict and the measures central banks such as the US Federal Reserve will take to control inflation.

"We don't think there's going to be a recession," Julian Emanuel, chief equity strategist at Evercore ISI, told Bloomberg television.