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European Stocks Close Weak On Growth Worries

European markets drifted lower on Tuesday, weighed down by reports showing continued spikes in coronavirus cases in several states across America, and disappointing industrial production data from Germany.

Lowering of economic forecasts by the European Commission contributed as well to the weakness in European markets.

Continued surge in new cases of coronavirus across the globe has raised fears that economies may be forced to resort to another lockdown. Already, there is growing uncertainty about the pace of economic recovery despite all the massive relief measures and stimulus packages announced by global central banks and governments.

U.S. Federal Reserve official Raphael Bostic told the Financial Times in an interview that there are signs that the American recovery is "levelling off".

The pan European Stoxx 600 drifted down 0.61%. The U.K.'s FTSE 100 declined 1.53%, Germany's DAX slid 0.92% and France's CAC 40 shed 0.74%, while Switzerland's SMI ended down 0.44%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Netherlands, Poland, Russia, Spain and Sweden ended notably lower.

Czech Republic and Norway edged down marginally, while Iceland, Ireland, Portugal and Turkey closed higher.

In the U.K. market, TUI declined more than 6.5%. Whitbread shed about 5.1% after the hotel and restaurant group unveiled a significant slump in first-quarter sales.

Smurfit Kappa Group, Informa, Compass Group, British Land Company, Associated British Foods, HSBC Holdings, Standard Chartered and IAG lost 3 to 4.2%.

Royal Bank, Imperial Brands, GlaxoSmithKline, 3i Group, Mondi, Vodafone and EasyJet also declined sharply, while Evraz, Coca-Cola, Smiths, Polymetal International and Antofagasta closed notably higher.

In the German market, Bayer lost nearly 5%. Adidas shed about 2.8%. Beiersdorf, Vonovia, SAP and Infineon Technologies also posted notable losses.

Wirecard shares climbed up nearly 23%. Merck and Lufthansa posted moderate gains.

In the French market, Sodexo lost more than 4%, while Unibail Rodamco and Technip lost about 3% each. Societe Generale, Orange, Dassault Systemes Group, Accor, Safran and Saint Gobain declined 1.3 to 2%.

On the other hand, Worldline and Bouygues gained 1.85% and 1.4%, respectively. ArcelorMittal and Carrefour also closed higher.

Eurozone is set to undergo an even deeper recession due to the coronavirus pandemic despite measures taken at both EU and national levels, the European Commission said in its Summer Forecast released today.

The currency bloc is forecast to contract 8.7% in 2020 instead of 7.7% projected in the Spring Forecast. Nonetheless, the region is forecast to grow 6.1% in 2021, which was slightly less robust than the 6.3% expansion projected previously.

Among the largest euro area countries, above-average GDP contractions were reported in France, Italy and Spain, while Germany and the Netherlands saw smaller hits.

The EU region is forecast to shrink 8.3% this year but to grow 5.8 percent next year. The rate for 2020 was revised from -7.4% and that for 2021 from 6.1%.

Germany's industrial production recovered in May, helped by an easing of lockdown measures, Destatis reported Tuesday. Industrial output grew 7.8% on a monthly basis in May, in contrast to a revised 17.5% fall in April. Production was forecast to grow 10% in May. On a yearly basis, industrial production declined 19.3% versus a revised 25% decrease in April.

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