European Stocks Notably Lower As Investors Weigh U.S. Debt Ceiling Deal Prospects

(RTTNews) - European stocks closed notably lower on Tuesday as investors stayed cautious, awaiting the passage of the U.S. debt ceiling deal before June 5.

Reports that a group of Republican lawmakers on the party's hard right said Monday they would oppose the deal reached by Biden and McCarthy over the weekend weighed on sentiment.

A drop in eurozone economic sentiment, hawkish Fed expectations and concerns around China's economic recovery also kept investors nervous.

Energy stocks tumbled as crude oil prices fell sharply.

The pan European Stoxx 600 ended 0.92% down. The U.K.'s FTSE 100 dropped 1.38%, Germany's DAX ended lower by 0.27% and France's CAC 40 fell 1.29%, while Switzerland's SMI ended 1.33% down.

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

Finland, Norway, Spain and Sweden ended with modest losses, while Iceland and Turkiye closed higher.

In the UK market, Ocado Group, Rolls-Royce Holdings, Shell, Unilever, Johnson Matthey, Diageo, British American Tobacco, Haleon, Astrazeneca, Anglo American Plc, Vodafone Group, BP, Imperial Brands and Croda International lost 2 to 4%.

Frasers Group climbed about 2.7%. B&M European Value Retail surged 2.15%. Hargreavs Lansdown, JD Sports Fashion, Whitbread, ABRDN, St. James's Place, Segro, BT Group, Centrica, Endeavour Mining and Kingfisher gained 1 to 2%.

In Paris, Credit Agricole plunged more than 10%. Societe Generale tumbled nearly 6% and Sanofi ended 4.7% down.

TotalEnergies, Capgemini, Pernod Ricard, Danone, Teleperformance, WorldLine, Carrefour, BNP Paribas, ArcelorMittal, Bouygues and Alstom lost 1 to 3.4%.

STMicroElectronics, Dassault Systemes, Unibail Rodamco and Engie gained 1 to 1.2%.

In the German market, Fresenius fell 2.7%. Beiersdorf ended 2.2% down, while Henkel, Bayer, Covestro, Symrise, BASF and Fresenius Medical Care lost 1.5 to 2%.

Commerzbank, Fresenius Medical Care, MTU Aero Engines, Sartorius and Volkswagen also ended notably lower.

Puma, Deutsche Post, Infineon, Siemens Energy and E.ON gained 1 to 1.7%.

In economic news, euro area economic sentiment deteriorated to the lowest in six months in May reflecting lower confidence in industry, services and retail trade, adding to concerns over growth prospects.

The economic sentiment index fell to 96.5 from 99.0 in April, survey results from the European Commission showed. This was the lowest reading since November and also below economists' forecast of 98.9.

Eurozone bank lending growth weakened further in April reflecting the transmission of the European Central Bank's tight monetary policy and signaled weak economic growth.

Data published by the ECB showed that credit to euro area residents grew at a slower pace of 1.5% in April from a year ago, while credit to general government dropped 0.9%.

Data from the State Secretariat for Economic Affairs, or SECO, showed the Swiss economy rebounded at a faster-than-expected pace at the start of the year on robust domestic demand.

Gross domestic product grew 0.3% sequentially in the first quarter after stagnating in the fourth quarter of 2022. The rate also exceeded economists' forecast of 0.1% expansion. GDP, adjusted for sports events, logged a quarterly growth of 0.5% after posting a nil growth.