European shares fall on French election uncertainty

European shares fell on Friday, weighed down by losses in banks and energy stocks as investors became more cautious ahead of the second round of voting in French parliamentary elections.

The pan-European Stoxx 600 index ended 0.2 per cent lower, after notching a more than one-week high early in the day.

The index, however, clocked a 1 per cent gain for the week. French financial markets have come under selling pressure since President Emmanuel Macron called for a snap election last month, with concerns that a far-right win could add to worries over fiscal sustainability. But there is also nervousness about what will happen if there is no clear winner in Sunday’s second round of voting.

Fresh polls showed the far-right National Rally (RN) party and its allies were still in the lead but looked to fall short of getting an outright majority.

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Dublin

Cairn Homes rose 4.6 per cent to €1.78 amid a general lift for UK and Irish home builders on the back of Labour’s victory in the UK election.

The party’s manifesto promises to speed up home-building by reforming the country’s planning system. Iseq heavyweight Ryanair’s share price rose by 2.7 per cent to €16.83 two days after announcing record passenger numbers.

The carrier said it flew a record 19.3 million passengers last month, up 11 per cent from a year earlier. Ryanair operated more than 106,000 flights in June, despite having to cancel almost 400 flights due to air traffic control delays.

AIB and Bank of Ireland were both down, falling by 1.8 per cent and 2 per cent respectively, amid a downturn in financials across Europe, while packaging giant Smurfit Kappa was marginally down at €41.44.

London

London’s FTSE 100 failed to hold on to gains from earlier in the day after new economic data in the United States turned investors away from events happening at home.

The blue-chip index moved 37.33 points lower, or 0.45 per cent, to 8,203.93 at close on Friday. Key jobs market data showed that America’s unemployment rate ticked up 4.1 per cent in June from 4 per cent in May, showing further signs of a cooling labour market.

In company news, shares in Crest Nicholson jumped higher following reports it had attracted new bidding interest from rival builder Avant Homes.

Later on Friday it confirmed that it had decided not to engage with the approach for an all-share proposal because it could still receive a formal offer from Bellway, which was already interested in making a bid. Shares in Crest were up 2.2 per cent at close.

Shell told shareholders it expects to take a hit of up to $2 billion (€1.8 billion) after it suspended construction work on one of Europe’s largest planned biofuels plants and sold a refinery in Singapore.

The oil and gas company nonetheless confirmed that its integrated gas production is expected to meet market expectations. Its share price closed 1.5 per cent lower.

Europe

The market focus in Europe was quickly shifting from the British election – where the outcome of Thursday’s vote was widely anticipated – to Sunday’s second-round legislative election in France. French stocks fell 0.3 per cent on Friday, but logged their biggest weekly gain since early May.

Banking stocks dropped 0.9 per cent, among the biggest weights on the benchmark index, while energy shares fell almost 1 per cent, leading sectoral declines.

Among European stocks, German chip systems manufacturer Aixtron rallied 17.8 per cent to the top of Stoxx 600 as its strong order intake for the second quarter overshadowed cuts to its full-year forecast.

New York

The Dow and the S&P 500 struggled for direction on Friday as investors assessed mixed payrolls data for cues on the Federal Reserve’s pace of policy easing, while gains in megacap tech stocks lifted the Nasdaq.

Futures initially rose after the US labour department’s closely watched report showed the unemployment rate ticked higher to 4.1 per cent in June, compared with expectations of it remaining unchanged at 4 per cent.

Treasury yields slipped after the data, lifting rate-sensitive megacap stocks such as Apple, Amazon and Meta Platforms, which were up between 0.7 per cent and 2.2 per cent.

Alphabet’s shares rose 1.6 per cent to a record high. Utilities and consumer discretionary stocks led sectoral gains, while the energy sector led declines. – Additional reporting by Reuters

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