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European Stocks Close Weak On Concerns Fed Might Aggressively Tighten Policy

European stocks closed lower on Friday as data showing a much bigger than expected rise in U.S. non-farm payroll employment in the month of July raised concerns the Fed will aggressively hike rates in the coming months.

Investors also continued to weigh the impact of the Bank of England's decsion to hike interest rates by 50 bps to 1.75% on Thursday.

Markets also digested a slew of earnings updates, and the latest batch of economic data from the region.

U.S.-China tensions weighed as well on sentiment. Days after U.S. House of Representative Speaker Nancy Pelosi visited Taiwan, the Chinese government has decided to impose sanctions on her and her family. China said it fired missiles over Taiwan for the first time, escalating tensions in the region.

The pan European Stoxx 600 tumbled 0.76%. The U.K.'s FTSE 100 edged down 0.11%, while Germany's DAX and France's CAC 40 drifted down 0.65% and 0.63%, respectively. Switzerland's SMI shed 0.71%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Poland, Russia and Sweden ended weak.

Czech Republic, Norway, Portugal and Turkiye closed higher, while Iceland and Spain settled flat.

In the UK market, WPP ended 8.76% down. Ocado Group ended lower by 6.3%. Dechra Pharmaceuticals, Spirax-Sarco Engineering, Next, Halma, Taylor Wimpey, Unite Group, Segro, Mondi, Smith (DS) and B&M European Value Retail shed 3 to 5.4%.

Hargreaves Landsdown climbed 5%. Antofagasta rallied 3.6%. Airtel Africa, Vodafone Group, BT Group, Rio Tinto, Fresnillo, Glencore, AstraZeneca and Natwest Group gained 1.2 to 3%.

In the French market, Teleperformance tumbled 6.25%. Publicis Groupe ended nearly 4% down. STMicroElectronics, Hermes International, Faurecia, Kering, Legrand, L'Oreal and Dassault Systemes shed 2 to 3%.

Credit Agricole, Orange, Renault, Carrefour, Air France-KLM, AXA, Vivendi, Sanofi, BNP Paribas and Airbus Group posted strong gains.

In the German market, Bayer plunged 7%. HelloFresh, Infineon Technologies, Symrise, Puma, Deutsche Wohnen, Adidas, Continental and Sartorius ended lower by 1.5 to 4.5%.

Allianz ended nearly 2% down after reporting a 23% fall in Q2 net profit.

Deutsche Post surged more than 4.5% after second-quarter earnings beat expectations. RWE, Fresenius Medical Care, Deutsche Post and Fresenius gained 1.3 to 2%.

In European economic news, data from Destatis showed industrial production in Germany grew 0.4% from May, revering a drop of 0.1%. Output was forecast to fall 0.3%.

France's industrial production expanded for the second straight month in June, advancing 1.4% month-on-month, well above the 0.2% rise in May. In contrast, economists had forecast a decline of 0.2%.

Manufacturing output also grew at a faster pace of 1.2% monthly in June, following a 1% gain in May.

Data from the customs office showed, France's foreign trade deficit increased to EUR 13.06 billion in June from EUR 5.79 billion in the corresponding month last year. In May, there was a shortfall of EUR 12.90 billion.

UK recruiters reported a slowdown in hiring activity in July due to increased uncertainty around the outlook, the latest KPMG and REC, Report on Jobs survey, compiled by S&P Global showed.

France's private payroll employment grew at a faster pace at the end of June, flash data from the statistical office Insee showed.

UK house price inflation eased slightly in July with the house price index climbing 11.8% year-over-year in July, slower than the 12.5% rise in June, survey data from the Llyods Bank subsidiary Halifax showed.

On a monthly basis, house prices dropped 0.1% in July, reversing a 1.4% significant increase in June. Further, this was the first monthly decline since June 2021. Economists had forecast a 1.2% gain.

Data from the Labor Department showed non-farm payroll employment in the U.S. spiked by 528,000 jobs in July after surging by an upwardly revised 398,000 jobs in June.

Economists had expected employment to climb by about 250,000 jobs compared to the addition of 372,000 jobs originally reported for the previous month.

With the stronger than expected job growth, the unemployment rate unexpectedly edged down to 3.5% in July from 3.6% in June. The unemployment rate was expected to remain unchanged.

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