European equity markets stayed subdued as China’s move to rein in lending drove down mining stocks and contributed to growing concerns about inflation.
The FTSE Eurofirst 300 index was down 0.1 per cent to 1,156.13, for a total rise this week of 1 per cent. Concerns about falling Chinese growth and demand for metals weighed on the mining index, which fell 1.9 per cent to 5,859.98.
Inflation concerns are also taking their toll on investor sentiment. China’s decision to raise bank reserve requirements came as data from the UK on Friday showed that rising commodities were driving up the cost of producer inputs.
“People are locking in a little bit of profit waiting to see what happens next week,” when more data on Chinese growth and UK inflation are set to be released, said Michael Hewson, analyst at CMC Markets.
Technology stocks and chipmakers got a slight fillip on Friday after Intel reported expectation-beating earnings and upbeat predictions for the coming year.
ASML, a Dutch semiconductor equipment vendor, led the market with a jump of 6.4 per cent to €29.95, marking a nine-year high for the group. Infineon, a German chipmaker, rose1.6 per cent to €7.34. Arm Holdings, a UK group, was also up strongly.
Overall, the FTSE Eurofirst 300 Technology Hardware index was 1.3 per cent higher at 463.08.
Also on Friday, Italy’s Atlantia, the toll road operator, gained ground as Abertis, a Spanish infrastructure company, sold its stake in the Italian group. Atlantia gained 5.1 per cent to €16.61, and Abertis, which booked €151m on the sale, rose 2.9 per cent to €14.37.
European banks rallied over the week, driven by successful debt auctions in the eurozone’s periphery. Banks in countries such as Spain and Italy showed strong gains after having slumped late last year following the Irish bail-out.
Spain’s BBVA rose 16.5 per cent over the week to €8.33, while KBC Group in Belgium rose 4.4 per cent to €26.10. The National Bank of Greece gained 8.5 per cent to close at €6.55.
Portugal’s Banco BPI gained 2.9 per cent to €1.35, despite hitting a low on Monday of €1.25.
Banks face the prospect of new levies to bolster a eurozone bail-out fund, but investors remain focused on their exposure to eurozone sovereign debt.
“That’s been the key driver of their performance since people have come back from the holidays and we’ve seen a significant widening of bond spreads,” said Daragh Quinn, an analyst with Nomura.
EADS, the Paris-listed aerospace group, rose 8.4 per cent throughout the week to €20.75 after announcements of a $15.6bn aircraft order from the India airline Indigo.
A Thai airline also announced that it would buy 26 new aircraft from Airbus, owned by EADS, between 2011 and 2017.