European Stocks Close Lower As Growth Worries, Rate Concerns Continue To Weigh

(RTTNews) - European stocks closed on a weak note on Monday as concerns about rising interest rates and their likely impact on global economic growth continued to weigh on sentiment, prompting investors to stay cautious about the near term outlook for the markets.

Heightened geopolitical tensions weighed as well. Russian President Vladimir Putin is prepared to hold a meeting of his security council amid calls for reprisals following a massive explosion on a key strategic bridge linking Crimea and Russia.

Markets also looked ahead to U.S. consumer price inflation data, due later this week. The data is likely show that inflation remained hot through last month.

In European economic news, the Eurozone Sentix Investor Confidence index deteriorated to -38.3 in October from -31.8 in September, providing little reason for hope.

Meanwhile, Fitch Ratings said the UK economy is set to enter deep recession as rapid interest rate hikes compound the impact of the energy crisis and the contraction in the eurozone.

Following extreme volatility in UK financial markets and the prospect of sharply higher interest rates, the rating agency downgraded its GDP forecast for next year to -1.0 percent from -0.2 percent projected in September. The economy is expected to recover next year to 1.8 percent.

The policy rate is forecast to rise to 4.25% by December 2022 from the current 2.25%. By the second quarter of 2023, the interest rate is forecast to advance to 5%.

The pan European Stoxx 600 drifted down 0.4%. The U.K.'s FTSE 100 and France's CAC 40 both ended lower by 0.45%, and Germany's DAX settled flat. Switzerland's SMI shed 0.45%.

Among other markets in Europe, Austria, Czech Republic, Denmark, Finland, Iceland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden ended weak.

Belgium, Greece, Ireland and Turkiye closed higher.

In the UK market, Haleon, Centrica, Rolls-Royce Holdings, Segro, Diageo, Severn Trent, Rentokil Initial and AstraZeneca lost 2 to 3%.

BP, RS Group, Fresenillo, Scottish Mortgage, Standard Chartered and Lloyds Banking Group also ended notably lower.

Smith (DS) soared more than 12%. In an update, the company said its trading continues to be good and consistent, and that it is looking forward to the remainder of the year with a positive note.

Smurfit Kappa Group rallied 6.75% and Mondi gained about 4.2%. Kingfisher, M&G, Coca-Cola, Croda International, Tesco, B&M European Value Retail, Associated British Foods, Unite Group, Ashtead Group, JD Sports Fashion and Sainsbury (J) advanced 1.7 to 3.2%.

In Paris, Atos, Pernod Ricard, Faurecia and Unibail Rodamco lost 2.2 to 4.1%. Engie, STMicroElectronics, Dassault Systemes, LVMH, Kering and Sodexo also ended notably lower.

Shares of IT services and consulting company Capgemini SE drifted lower after announcing the acquisition of UK-based Quorsus.

ArcelorMittal, Renault, Vinci and Saint Gobain gained 2.5 to 3.3%. Thales, Bouygues, Societe Generale, Veolia, Orange and Carrefour moved up 1 to 1.6%.

In the German market, Volkswagen, Porsche Automobil, Qiagen, RWE, Vonovia, Deutsche Wohnen, Fresenius Medical Care, Fresenius, Infineon Technologies and Munich RE lost 2 to 4.5%.

Covestro climbed nearly 10%. BASF surged 5.75% and Deutsche Post gained about 5%. HeidelbergCement, HelloFresh, Brenntag, Deutsche Bank, Siemens and Henkel also closed with strong gains.