European stocks weaken; U.K. retail sales slump

Investing.com - European stock markets traded lower Friday, ending the week on a somber note as investors digested falling U.K. retail sales ahead of the release of eurozone inflation data.

At 03:40 ET (07:40 GMT), the DAX index in Germany traded 1% lower, the CAC 40 in France dropped 1.2%, while the FTSE 100 in the U.K. traded 0.9% lower.

The major European indices are on course for losses of between over 2% this week, largely on worries surrounding China’s economic slowdown and the potential for higher interest rates from the Federal Reserve.

U.K. retail sales slump in July

However, the wider European outlook is also a cause for concern with inflation still running at elevated levels while growth is struggling to show much upside.

U.K. retail sales slumped 1.2% on the month in July, an annual drop of 3.2%, data showed Friday, as consumers struggled with high prices, limiting their spending on discretionary items.

British July annual inflation came in at 6.8% on Wednesday, a drop from 7.9% the prior month, but still considerably above the Bank of England’s 2% medium-term target.

Eurozone inflation data due

There is more inflation data due in Europe later in the session, with monthly eurozone CPI expected to drop 0.1% on the month in July, an annual figure of 5.3%. 

ECB chief economist Philip Lane is also due to offer some insight into the thinking of the bloc's monetary policymakers in a podcast.

European Central Bank President Christine Lagarde hinted that the central bank would pause its more than year-long rate-hiking campaign in September, but a further rise by year-end is still on the cards with inflation running hot.

China Evergrande files for bankruptcy protection

Still, a lot of the wider focus remains on the economic slowdown in China, with Chinese property developer China Evergrande (HK:3333) filing for Chapter 15 protection in a U.S. bankruptcy court overnight.

The country’s property sector has had a torrid week, prompting the People’s Bank of China to say it will continue to pump up liquidity conditions after an emergency rate cut earlier this week.

Back in Europe, Suse (ETR:SUSEG) stock surged over 50% after the software solutions provider said it would be taken private by its majority shareholder EQT (ST:EQTAB).

Crude set to end prolonged weekly winning streak

Oil prices steadied Friday, but look set to end a seven-week winning streak on concerns of slowing growth in China, the world’s largest crude importer, as well as the potential of higher interest rates from the Federal Reserve.

Crude prices saw some strength on Thursday, rising from a two-week low after China’s central bank said it will keep markets flush with liquidity to help shore up economic growth. 

However, both contracts were set to lose over 3% this week after having rallied for the past seven weeks post extended supply cuts by major producers Saudi Arabia and Russia. 

By 03:40 ET, the U.S. crude futures edged higher at $80.41 a barrel, while the Brent contract dropped 0.1% to $84.06. 

Additionally, gold futures rose 0.4% to $1,922.35/oz, while EUR/USD traded 0.1% lower at 1.0869.