European Stocks Close Sharply Lower As Recession Fears Weigh

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European stocks closed sharply lower on Friday, extending recent losses, as mounting fears about a global recession rendered the mood extremely bearish.

The World Bank's latest report on global economy weighed on sentiment. The World Bank has warned that the world could face a recession next year amid simultaneous tightening of monetary policy by central banks.

World Bank economists warned that the actions may not be enough to bring high prices under control, leading to a need for more interest rate hikes, which in turn will put the brakes on growth. The bank called for boosting production and removing supply bottlenecks to ease inflation.

Several indicators of global recessions are already "flashing signs", the report said. The global economy is now in its steepest slowdown following a post-recession recovery since 1970, it added.

Recent hawkish comments from several Fed and ECB officials, and the ongoing energy crisis hurt as well.

The pan European Stoxx 600 drifted down 1.58%. The U.K.'s FTSE 100 ended 0.62% down, Germany's DAX tumbled 1.66% and France's CAC 40 dropped 1.31%, while Switzerland's SMI fell 1.27%. The FTSE 100, CAC 40 and the DAX shed about 1.5%, 2% and 2.7%, respectively in the week.

Among other markets in Europe, Austria, Czech Republic, Denmark, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Spain and Sweden ended sharply lower.

Belgium, Finland, Greece and Russia also closed weak, albeit with less pronounced losses. Turkiye bucked the trend and moved modestly higher.

In the UK market, Dechra Pharmaceuticals, IHG, Smith (DS), Spirax-Sarco Engineering, Schrodders, Glencore, DCC, Airtel Africa, IAG, B&M European Value Retail and Croda International lost 2 to 5%.

Royal Mail plunged 8% due to heavy selling at the counter, probably due to a profit warning issued by US parcels delivery firm FedEx.

Ocado Group gained 3.2%, rebounding a bit from recent sharp losses. M&G, Hikma Pharmaceuticals and Barratt Developments gained 1.1 to 2%.

In Paris, Atos shed about 6%. Bouygues ended lower by 5.2%, Air France-KLM, WorldLine, Vinci, Airbus Group, Safran, CapGemini, Veolia, Credit Agricole, Essilor, Publicis Groupe, Societe Generale and BNP Paribas lost 2 to 5%.

Faurecia rallied 3.3%. Unibail Rodamco and Renault also ended sharply higher.

In the German market, Sartorius tumbled more than 7% and Deutsche Post lost around 6.5%. MTU Aero Engines, Merck, Siemens Healthineers, Brenntag, Volkswagen, BASF, Covestro, Siemens, Deutsche Bank, Bayer and SAP lost 1.6 to 4.2%.

On the economic front, Eurozone inflation hit a record high in August, as initially estimated, final data from Eurostat showed. Inflation advanced to 9.1% from 8.9% in July. The rate came in line with the estimate published on August 31.

Core inflation that excludes energy, food, alcohol and tobacco, advanced to 4.3% in August, as estimated, from 4% in July.

UK retail sales declined more than expected in August on widespread decreases across food, non-food and fuel retailing, official data showed.

The retail sales volume declined 1.6% month-on-month, in contrast to July's 0.4% increase, the Office for National Statistics reported. Economists had forecast a moderate 0.5% decline.

Likewise, retail sales excluding auto fuel were also down 1.6% after rising 0.4 percent in July. Sales were expected to ease 0.7%.

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