European shares fall amid Israel-Hamas war and concerns over interest rates

European shares declined on Friday amid concerns that the Israel-Hamas war could give rise to a broader regional conflict in the Middle East and as investors fretted afresh about interest rates.

The pan-European Stoxx index declined by 1.4 per cent – having lost 3.4 per cent over the course of the week – to hit its lowest level in seven month. Widening geopolitical tensions fed into worries about disruption in oil supplies.

Israel levelled a northern Gaza district on Friday and hit an Orthodox Christian church where people had been sheltering, as it made clear that a command to invade Gaza was expected soon.

Rising government bond yields in Europe and in the US have added to risk-averse sentiment, with central bank policymakers, including Federal Reserve chair Jerome Powell, hinting at continued restrictive monetary policy.

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“Geopolitics is driving investor sentiment at this point, around rising commodity prices and the potential for that to feed into inflation,” said Richard Flax, chief investment officer at Moneyfarm.

Dublin

The Iseq All Share index declined by 2.6 per cent, having extended earlier losses as the session came to an end.

Travel-related shares were particularly out of sorts, with Ryanair sliding 3.2 per cent to €14.32, while Dalata Hotel Group dropped 2.2 per cent to €3.96.

Banking shares were also lower, with AIB falling 2.5 per cent to €4.19. The shares had during the week hit a five-year high above the €4.40 price at which AIB shares were sold in an initial public offering in 2017.

Bank of Ireland declined by 2.6 per cent to €9.08.

Housebuilders were hit too, with Cairn Homes declining by 2.8 per cent and Glenveagh Properties slipping 2.6 per cent.

London

The main FTSE 100 index closed 1.3 per cent lower, posting its worst weekly performance in two months.

Financial stocks were a big drag, with HSBC and Prudential falling 3.9 per cent and 3.4 per cent, respectively.

Industrial metal miners eased 3.1 per cent, leading sectoral declines as copper prices were hurt by a stronger dollar, sluggish global growth and lack of additional stimulus in top metals consumer China.

Meanwhile, data showed British retail sales fell more than expected in September.

“Rising prices and broader cost-of-living pressures have prompted consumers to cut back on non-essential shopping,” said Victoria Scholar, head of investment at interactive investor. “Today’s figures highlight the sluggish consumer backdrop that is contributing to a weak economy.”

Another set of data showed British consumer confidence tumbled in October after rising to its highest since the start of 2022 in September, reflecting renewed concerns about the strength of the consumer.

IHG said it expected to close out 2023 with “very strong” financials as the Holiday Inn owner reported a rise in quarterly revenue per room on strong travel demand. However, shares fell 4.5 per cent on slower quarterly net unit growth.

Europe

Swedish garden equipment maker Husqvarna lost 8 per cent after third-quarter revenue missed expectations.

UBS lost 2.8 per cent. The Swiss bank is set to overhaul the board of its domestic Swiss business after its takeover of Credit Suisse.

Tomra Systems sank 22.6 per cent after the after Norwegian mining and recycling group missed third-quarter results estimates.

L’Oreal fell 1.5 per cent after a larger-than-expected hit to its travel retail business in Asia.

Investors are bracing for a big week ahead with earnings in full swing and as the European Central Bank (ECB) holds a monetary policy meeting.

New York

Wall Street’s main indexes were lower in early afternoon trading as US Treasury yields hovered near multiyear highs following hawkish remarks by Mr Powell at the Fed, while the Middle East conflict kept investors jittery.

Shares of mid-sized US banks fell after a string of earnings reports heightened investor concerns that the boost to lenders from the Fed’s interest rate hikes was tapering off.

Credit card giant American Express beat third-quarter profit estimates, but its shares fell.

Solar products manufacturer SolarEdge slumped after it warned of significantly lower revenue in the fourth quarter.

Cryptocurrency and blockchain-related firms Coinbase Global, Riot Platforms and Marathon Digital rose, tracking higher bitcoin prices. – Additional reporting: Reuters