European shares slip on lockdown worries, still set for third week of gains

(Reuters) – European stocks slid on Friday after France imposed fresh regional lockdowns to curb the spread of the coronavirus amid signs of slowing vaccination in some countries.

The pan-European STOXX 600 fell 0.4%, tracking a dour session on Wall Street overnight after U.S. bond yields surged.

France’s CAC 40 dropped 0.6% after the nation imposed a new four-week lockdown from Friday in 16 regions badly hit by the health crisis.

French hotel group Accor, Air France and catering company Sodexo were flat to lower in morning trade.

Concerns over the pace of vaccination gained ground after Britain said it will have to slow its rollout next month due to a supply crunch caused by a delay in shipment.

“We are in this awkward phase where we are clearly seeing light at the end of the tunnel even through slow vaccination,” said Philipp Lisibach, chief global strategist at Credit Suisse in Zurich.

“Nonetheless, in the summer we expect that many countries will be in a position to lift some of the restrictions and we expect that this is going to be the kick off of a sharp economic reacceleration in Europe.”

European stocks were on track for a 0.4% weekly gain as a rally in automakers and signs that the U.S. Federal Reserve will maintain low interest rates despite an expected surge in economic growth outweighed concerns about rising yields.

Automakers fell 0.8% after a strong run and were still on course for its third straight week of gains.

Oil majors BP, Royal Dutch Shell and Total fell between 0.8% and 1.8% after crude prices plunged almost 7% on fears the new lockdowns will hurt fuel demand.

Europe’s biggest utility Enel rose 1% after it stuck to its targets for the year after beating earnings expectations.

German sportswear makers Adidas and Puma fell more than 1% each after Nike’s disappointing full-year revenue forecast.

Evolution Gaming rose 3.6% after Goldman Sachs started coverage of the Swedish casino games developer with a ‘buy’ rating.

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