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Stocks in Europe slip amid economic worries


On Tuesday, European shares took a dip, pausing from their sharp rally that began at the start of the year. This was due to China posting its weakest annual economic growth in almost half a century, which has caused investors to worry about an economic slowdown. The pan-European STOXX 600 went down by 0.3% by 0925 GMT, after reaching its highest level in nine months in the previous session.

Asian shares and U.S. futures also decreased after China’s economic growth in 2022 slumped as the fourth quarter was greatly affected by strict COVID-19 restrictions and a property market slump. This has put pressure on policymakers to unveil more stimulus this year. The World Economic Forum surveyed private and public sector chief economists and found that two-thirds of them expect a global recession this year. This has cast a shadow over the start of the Davos conference, which began on Monday.

Rate-sensitive tech stocks dropped 0.8%, which had an impact on Europe’s STOXX 600 in early trading. The benchmark index still gained almost 7% in an upbeat start to the year, driven by hopes of a rebound in China’s economy, easing of price pressures and growing expectations of a milder-than-expected recession. Data on Tuesday showed that German inflation eased further in the final month of 2022, confirming preliminary data. However, Germany’s BDI industry association warned that the economy is expected to contract by 0.3% this year as the energy crisis continues to weigh on the industry in Europe’s largest economy.

China-exposed LVMH fell 0.4% after briefly hitting a record high that pushed the luxury goods group’s market cap above 400 billion euros ($432.64 billion) for the first time. UK’s blue-chip FTSE 100 dipped 0.2%, but was still within a hair’s breadth of hitting a record high of 7,903.50. Shares of Ocado Group fell 6.6% after its online joint venture Ocado Retail said its customers purchased fewer items per order in the run-up to Christmas in response to the cost-of-living crisis. THG slid 5.1% after the online retail platform warned on profit as its revenue growth missed its target.

Shares of Hays Plc gained 2.2% after the British recruitment agency reported a rise in its second-quarter net fees. Investors are also looking forward to U.S. earnings with Goldman Sachs and Morgan Stanley expected to report later in the day.

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