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European Stocks Close Sharply Lower On Growth Worries

European markets ended sharply lower on Thursday as stocks plunged due to a heavy sell-off as worries about the impact of the coronavirus pandemic mounted after data showed a sharp contraction in U.S. GDP, and on the Federal Reserve's weak outlook for the economy.

A slew of disappointing earnings reports from major European companies weighed as well.

The pan European Stoxx 600 tumbled 2.16%. The U.K.'s FTSE 100 slid 2.31%, France's CAC 40 declined 2.13%, Germany's DAX plunged 3.45% and Switzerland's SMI shed 1.73%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden closed sharply lower with their benchmark indices falling 1 to 3.4%.

Denmark and Turkey ended with moderate losses.

In the U.K. market, Lloyds Banking Group shares plunged 7.7% after it swung to a pretax loss in the first half of 2020.

Royal Dutch Shell lost more than 6% after the company said it booked a US$18.1bn quarterly loss after a record writedown on the value of its oil and gas assets. Standard Chartered Bank slid 6% after reporting a 33% fall in its first-half profit.

Legal & General, TUI, Prudential, Melrose, Aviva, HSBC Holdings, Associated British foods, Fresnillo, BT Group, Standard Life and Barclays lost 4 to 6%. Anglo American declined sharply after slashing dividend following a 39% drop in first-half profits.

On the other hand, BAE Systems surged up nearly 6%. AstraZeneca gained 1.5% after second-quarter sales and profit topped forecasts. Flutter Entertainment and Rentokil Initial also ended sharply higher.

In Germany, Wirecard shares plunged 11%. Volkswagen, HeidelbergCement, Fresenius Medical Care, Fresenius, Allianz, SAP, Siemens, Munich RE, Continental, BASF, Thyssenkrupp, BMW, Adidas, Bayer, Daimler and Infineon Technologies lost 3 to 6%.

In the French market, Renault plummeted more than 9% on disappointing results. Unibail Rodamco lost 8.7%. Orange, Danone, Societe Generale, ArcelorMittal, Peugeot, Credit Agricole, Capgemini, BNP Paribas, STMicroElectronics, Carrefour and Saint Cobain declined 3 to 6%.

On the other hand, Technip surged up 5.4%, Safran climbed nearly 4% and Airbus Group shares gained about 1.9%.

In economic news, monthly data from Destatis showed jobless rate in Germany rose to a seasonally adjusted 4.2% in June from 4.1% in May. On an unadjusted basis, the unemployment rate was 4.5% versus 4.4% a month ago.

Germany's economy contracted the most on record in the second quarter amid coronavirus pandemic, another data from Destatis revealed. Gross domestic product fell 10.1% sequentially after shrinking 2% in the first quarter. This was the largest decline since the records began in 1970. Economists had forecast a decrease of 9%.

On a yearly basis, GDP declined by calendar-adjusted 11.7% in the second quarter versus economists' forecast of 11.3%. Price-adjusted GDP also declined 11.7%.

Another data from Destatis showed consumer prices in Germany declined unexpectedly by 0.1% year-on-year, following a 0.9% rise in June. Prices were forecast to rise 0.2%. On a monthly basis, consumer prices were down 0.5%, faster than the expected fall of 0.2%.

Data from Eurostat showed the jobless rate in the euro area rose to 7.8% in June from 7.7% in May. The rate was forecast to remain unchanged at 7.7%.

Eurozone economic confidence improved to a four-month high in July as sentiment in industrial and service sectors strengthened amid the relaxation of coronavirus containment measures, survey data showed. Elsewhere, official data revealed that the unemployment rate increased in June although member countries started to phase out stringent steps taken to curb the spread of Covid-19.

The economic sentiment index climbed to 82.3 in July from 75.8 in the previous month, survey data from European Commission showed. The score was forecast to rise to 81.0.

France's producer prices declined at a softer rate in June, data from the statistical office Insee showed. The producer prices in the total market fell 2.7% year-on-year in June, following a 4% decline in May.

In the French market, producer prices decreased 2.3% annually in June, following a 3.4% fall in the previous month. On a monthly basis, producer prices rose 0.7% in June, after remaining unchanged in the previous month.

In U.S. economic news, data from the Commerce Department showed real gross domestic product plummeted at an annual rate of 32.9% in the second quarter following a 5% slump in the first quarter. Economists had expected a 34.1% nosedive in GDP.

A report from the Labor Department said initial jobless claims edged up to 1.434 million in the week ended July 25th, an increase of 12,000 from the previous week's revised level of 1,422,000. Economists had expected jobless claims to rise to 1.450 million from the 1.416 million originally reported for the previous week.

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