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European Shares Fall After France Attack

Markets.3

European stocks retreated from a three-week high, led by shares in France after a deadly terror attack in Nice. In Asia, equities rose for a fifth day as Chinese economic data beat estimates amid a strong start to the corporate earnings season.

The Stoxx Europe 600 Index pared its weekly advance after the attack, which killed at least 80 and prompted France to extend a state of emergency. The MSCI Asia Pacific Index briefly exceeded its highest close of the year as the Hong Kong-listed stocks of Chinese companies extended their biggest weekly gain in four months and Taiwan’s equities entered a bull market. Japan’s Topix index capped its best week since 2009 and the yen traded near pre-Brexit levels on prospects for stimulus. The pound strengthened, oil fell and gold was poised for its first weekly loss since May.

More than $4 trillion has been added to the value of global equities since June 27 as the U.S. economy outperforms projections and speculation mounts that policy makers will take steps to limit the fallout from the U.K.’s vote to leave the European Union. Laurence D. Fink, who runs the world’s largest asset manager as chief executive officer of BlackRock Inc., said the stock rally is unlikely to be sustained without support from corporate profits. The earnings season got off to a promising start this week, with JPMorgan Chase & Co. and Alcoa Inc. exceeding estimates along with Daimler AG.

“We’re seeing better-than-expected growth, particularly in the U.S. economy, and we’ve got a higher likelihood of central bank stimulus,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told Bloomberg Radio. “These ideas are opposing but at the moment they are both supporting equities. At some point there is going to have to be a resolution of that.”

The impact of past terror attacks on financial markets has typically proved short-lived. Multiple attacks in Paris in November that left 130 dead, as well as bombings that killed 191 people on Madrid commuter trains in March 2004 and left more than 50 dead in London in July 2005 spurred selloffs in equities that were erased days or weeks later.

China’s economic growth held at 6.7 percent in the second quarter, beating the 6.6 percent expansion forecast in a Bloomberg survey. Figures for factory output, retail sales and new lending also topped estimates, while investment slowed. The U.S. also has a data dump coming on Friday, with gauges of household spending, inflation, industrial production and consumer confidence scheduled.

Stocks

The Stoxx Europe 600 Index fell 0.2 percent as of 8:25 a.m. London time, with France’s CAC 40 Index down 0.4 percent. Swatch Group AG tumbled 11 percent after the watchmaker said first-half profit plunged 50 percent to 60 percent, the most in at least a decade. Bayer AG fell less than 1 percent after the company upped its bid for Monsanto Co. to $54.7 billion.

The MSCI Asia Pacific Index added 0.4 percent, boosting this week’s gain to more than 4 percent. The Hang Seng China Enterprises Index climbed 0.5 percent, headed for a 6.1 percent weekly advance. The Shanghai Composite Index held near a three-month high.

“The market has been more positive about equities because global liquidity is ample and economic data are improving,” said Peter So, co-head of research at CCB International Securities Ltd. in Hong Kong.

The Topix closed up 0.5 percent, extending this week’s jump to about 9 percent. Fast Retailing Co. soared 18 percent, the most since 1998, after the operator of the Uniqlo clothing chain posted a profit that beat estimates. Nintendo Co. surged by a record 70 percent this week after its Pokemon Go mobile game proved an instant hit. Messaging company Line Corp. rallied 32 percent in its Japan trading debut.

Taiwan’s Taiex index extended its advance from a three-year low in August to more than 20 percent, meeting the common definition of a bull market. India’s benchmark fell for the first time in a week, led by a 10 percent plunge in Infosys Ltd. after the software services company cut its sales forecast.

Futures on the S&P 500 Index fell 0.1 percent, after the benchmark ended the last session at a record. Analysts project a 5.7 percent earnings decline at S&P 500 firms in the second quarter, which would make it a fifth straight drop, the longest streak since 2009. Wells Fargo & Co. and Citigroup are among firms posting results on Friday.

Source: Bloomberg