Summary
- Volkswagen rallies after board approves turnaround plan
- Banking shares down after Waller’s comments
- Oil set for steepest weekly gain since mid-July
(Reuters) – European shares ticked lower on Friday ahead of closely watched U.S. jobs data, while Volkswagen’s shares rallied after the automaker announced a major transformation plan.
The pan-European STOXX 600 was down 0.2% at 648.08 points by 0838 GMT. Germany’s DAX inched 0.1% lower, London’s FTSE dropped 0.2% and France’s CAC 40 also dipped 0.2%.
Volkswagen gained 5.7%, the top gainer in the DAX index, after the supervisory board of Europe’s largest automaker struck a turnaround agreement that averted an escalation with unions and shareholder Lower Saxony.
The broader European autos index jumped 4.3%.
The automaker faces pressure from U.S. import tariffs, a stagnant European market as well as aggressive Chinese rivals that have all hurt its margin and hammered the stock.
Despite Friday’s gain, its shares down more than 20% so far this year.
“It definitely is a move in the right direction but it’s going to take more than just this announcement for us to see a really sustained share price recovery,” said Fiona Cincotta, senior market analyst at City Index.
European banking stocks fell 0.7%, reversing some of their recent strong gains after Federal Reserve Governor Christopher Waller’s comments on Thursday eased concerns about a tighter monetary policy.
“His comments just helped the markets rein in Federal Reserve rate hike expectation,” said City Index’s Cincotta.
Investors await the August U.S. nonfarm payrolls report due to be released later in the day.
Meanwhile, Brent crude traded around $96 a barrel and was on track for its steepest weekly gain since mid-July.
European economies are vulnerable to rising oil prices because of their reliance on energy imports.
J.P. Morgan and BNP Paribas said they expect the European Central Bank to deliver another 25-basis-point rate hike in December, as elevated energy prices strengthen the case for further tightening.
Reporting by Sudeshna Ghoshal in Bengaluru; Editing by Subhranshu Sahu and Nivedita Bhattacharjee
