by Blandine Henault

PARIS (Reuters) – European stock markets ended in sharp decline on Friday, in a market context weighed down by fears about the trajectory of rates in the United States.

In Paris, the CAC 40 ended down 0.38% at 7,164.11 points. The British Footsie lost 0.65% and the German Dax also lost 0.65%.

The EuroStoxx 50 index fell by 0.35%, the FTSEurofirst 300 by 0.57% and the Stoxx 600 by 0.61%.

Over the whole week, the CAC 40 dropped 2.4%, its biggest weekly decline since early July, and the Stoxx 600 lost 2.3%.

Recent statistics in the United States have shown a clear resilience of the American economy to the tightening of monetary conditions, which is fueling expectations of a high interest rate environment for an extended period.

In this context, the speech by the Chairman of the Federal Reserve (Fed), Jerome Powell, scheduled for next Friday at the symposium in Jackson Hole (Texas) will be followed with great attention.

Investors are also awaiting announcements from the Chinese authorities on major measures to support the economy, while the recent tensions in the real estate market have exacerbated the feeling of crisis in the country.

SEE ALSO: WEEKLY POINT-The markets concentrated on the Jackson Hole meeting

RATE

Risk aversion is pushing investors to take refuge in sovereign debt, which is weighing on yields which had climbed the day before with expectations of prolonged high rates.

The yield of ten-year Treasuries dropped nearly eight basis points, to 4.231% after peaking at 4.328% the day before, the highest since last October.

Investors are watching October’s high, at 4.338%, which, if breached, would bring the US 10-year rate back to 2007 levels.

In Europe, the ten-year German Bund yield, the benchmark for the region, fell eight basis points to 2.62%.

CHANGES

The dollar retreated (-0.15%) against a basket of benchmark currencies in the wake of falling US bond yields.

The greenback is nonetheless on track to post its fifth straight weekly increase, its longest series in 15 months, favored by its quality as a safe haven asset.

The euro is changing little against the dollar, at 1.0873.

On the cryptocurrency side, bitcoin hit a two-month low after having already fallen more than 7% the day before in the context of risk aversion.

VALUES

No respite for Adyen, who, after his historic plunge of 39% on Thursday, lost another 2.9% on the Amsterdam Stock Exchange. In the process, the competitor Worldline fell by 1.33% in Paris.

The prospect of high rates for a longer period than expected weighed on the real estate sector (-1.73%). In Paris, Unibail-Rodamco-Westfield finished bottom of the CAC 40, with a decline of 2.15%.

Only the technology (+0.15%), community services (+0.41%) and telecoms (+0.08%) compartments did well.

AT WALL STREET

Fears about the trajectory of rates in the United States are also weighing on the New York Stock Exchange, in particular on the major so-called growth stocks and the technology sector.

At closing time in Europe, the Dow Jones climbed 0.18% after erasing its initial losses. The S&P 500 is stable while the Nasdaq is down 0.26%.

THE INDICATORS OF THE DAY

Inflation in the euro zone was confirmed at 5.3% over one year in July.

In Britain, retail sales fell more than expected last month, affected by poor weather.

OIL

Crude prices are regaining some ground but they are about to end a series of seven consecutive weeks of gains, fears over Chinese growth and further interest rate hikes in the United States – two brakes to demand – offsetting signs of supply reductions.

The barrel of Brent from the North Sea advanced 0.3% to 84.37 dollars and that of American light crude (WTI) gained 0.5% to 80.78 dollars.

The two references are currently down around 2.8% over the week.

(Written by Blandine Hénault)

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