(Bloomberg) -- European shares slumped as oil fell and rising Covid-19 cases fueled concerns about economic growth.
The Stoxx Europe 600 Index declined 0.8% by the close in London, having risen as much as 0.6% earlier. The oil sector paced the retreat with a 2.7% decline as crude dropped after a key Libyan oil field resumed production.
European equities earlier trimmed gains after Reuters reported that the Trump administration this week plans to finalize regulations that will bar the government from awarding federal contracts to companies that use gear from Chinese firms, including Huawei. Investors continue to focus on rising Covid-19 cases and their economic impact, with new shutdowns in the U.S. seen as an ominous sign -- even as jobs data Wednesday came in better than expected.
The region’s equity rebound took a hiatus earlier this week, as doubts about an agreement over European Union stimulus spending and the relentless spread of the coronavirus in key overseas markets jangled nerves. Stock gauges in most major countries remain far from erasing losses in the year to date.
“Valuations in Europe are about where they should be,” given economic metrics and remaining virus risk, CMC Markets analyst David Madden said by phone. The region’s tepid performance in recent days is linked to the lure of global tech outperformance, which is largely clustered in North America, Madden added.
Technology was the only sector to advance in Europe on Thursday, boosted by SAP SE’s surged to a record high after the software firm’s upbeat earnings report.
Rolls-Royce Holdings Plc tumbled 11% after warning it will take years to bounce back from the coronavirus crisis.
©2020 Bloomberg L.P.