European Stocks Close Lower On Geopolitical Tensions

(RTTNews) - European stocks closed lower on Friday, weighed down by geopolitical concerns due to rising clashes in Gaza and Ukraine, and political uncertainty in France. Investors also digested the latest batch of economic data, including the closely watched U.S. personal consumption expenditure report.

Commerce Department report showing U.S. consumer prices increased in line with estimates in the month of July. The report said the personal consumption expenditures (PCE) price index rose by 0.2% in July after climbing 0.3% in June.

The annual rate of growth by the PCE price index in July came in unchanged from June at 2.6%, which was also in line with estimates. The annual rate of growth by the core PCE price index ticked up to 2.9 in July from 2.8 percent in June. The slight acceleration also matched estimates.

The data has increased confidence the Federal Reserve will lower interest rates next month, but a September rate cut may already be priced into the markets.

The pan European Stoxx 600 closed down 0.64%. The U.K.'s FTSE 100 ended 0.32% down, Germany's DAX ended lower by 0.57% and France's CAC 40 drifted down 0.76%, while Switzerland's SMI settled with a loss of 0.26%.

Among other markets in Europe, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed weak.

Norway bucked the trend and closed modestly higher, while Iceland ended flat.

In the UK market, bank stocks were under pressure amid reports of likely imposition of windfall tax on banks.

Natwest Group closed 4.85% down. Lloyds Banking Group ended 3.4% down, and Barclays closed lower by 2.2%. HSBC Holdings lost nearly 1%, while Standard Chartered bucked the trend and closed 0.8% up.

JD Sports Fashion closed lower by about 4.1%. Kingfisher, Legal & General, St. James's Place, Persimmon, Entain, Hikma Pharmaceuticals, Barratt Redrow, IAG, Marks & Spencer and Relx also ended sharply lower.

Rentokil Initial, Prudential and Fresnillo gained 2 to 2.5%. Endeavour Mining, Convatec Group, Rolls-Royce Holdings, Sainsbury (J), British American Tobacco and Unilever closed higher by 0.9 to 2%.

In the German market, Infineon closed down 3.7%. Porsche ended 2.1% down. Adidas, SAP, Zalando, Siemens Energy, E.ON, Brenntag, Continental, BASF and Beiersdorf lost 1 to 2%.

Puma rallied nearly 4%. Rheinmetall gained 3.3%, and Fresenius Medical Care closed with a gain of 1.6%. Sartorius, Commerzbank and Merck posted moderate gains.

In the French market, Pernod Ricard ended more than 3% down. Kering, Capgemini, Teleperformance, STMicroElectronics, LVMH, Schneider Electric, Hermes International, Saint-Gobain, Dassault Systemes and EssilorExottica also ended notably lower.

Orange climbed about 1.2%. Unibail Rodamco, Societe Generale and TotalEnergies posted moderate gains.

Data from Insee showed France's annual inflation rate eased to 0.9% in August 2025, below market expectations of holding steady at July's 1%, according to a preliminary estimate.

On a monthly basis, consumer prices rose 0.4%, accelerating from a 0.2% gain in July, supported by a seasonal rebound in clothing prices after summer sales, alongside smaller increases in food and services, while energy slipped slightly. The annual harmonized inflation rate slowed to 0.8% from 0.9%, and the monthly HICP rose 0.5% after 0.3% previously.

The French economy grew 0.3% in the second quarter, in line with preliminary estimates, picking up from 0.1% in the first quarter, and marking the strongest pace in three quarters.

The Gross Domestic Product in France expanded 0.8% in the second quarter of 2025 over the same quarter of the previous year.

The total number of payrolled employees in France increased by 51,900, or 0.2% to 27.1 million in the second quarter of 2025, following a 0.1% fall in the previous quarter.

Data from Destatis showed Germany's import prices dropped 1.4% in July from a year ago, the same as in the previous month. Economists had forecast an annual drop of 1.2%.

The sharp decrease in energy prices had the biggest impact on overall import prices, Destatis said. Energy prices plunged 12.5%. Excluding energy, import prices were down 0.2% from July 2024.

On a monthly basis, import prices fell 0.4% after remaining flat in June.

Further, data showed that export price inflation softened to 0.6% in July from 0.7% a month ago.

Separate official data showed that retail sales declined 1.5% monthly in July, in contrast to a 1% recovery in June. Food sales contracted 1.8%, and those of non-food sales slid by 0.7%. The annual retail sales growth eased notably to 1.9% from 4.9%.

Meanwhile, the seasonally adjusted unemployment rate in Germany was unchanged from the previous month at 6.3% in August of 2025, aligned with market expectations to tie the highest ratio since September of 2020.