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(Alliance News) - European equities were largely lower Friday, though London's FTSE 100 index was clinging to a marginal gain at midday, as traders await fresh impetus from progress in US stimulus talks.
The subdued end-of-week trading came after the latest reading of the UK economy showed a record fall in gross domestic product in 2020, despite some economic recovery in the third and fourth quarters.
"Recent gains brought about from US stimulus and vaccination optimism has faded to bring a more 'wait-and-see' approach from markets," IG Markets analyst Joshua Mahony commented.
London's blue-chip stock index was up just 1.13 points at 6,529.85.
The mid-cap FTSE 250 index fell 49.63 points, or 0.2%, to 20,968.22. The AIM All-Share index was down 0.45 of a point at 1,218.35.
The Cboe UK 100 index was marginally higher at 648.55. The Cboe 250 was down 0.2% at 18,460.26 and the Cboe Small Companies was down 0.4% at 12,630.03.
In mainland Europe, the CAC 40 in Paris was marginally lower and the DAX 30 in Frankfurt was down 0.5%.
UK gross domestic product grew by 1.0% on a quarterly basis in the final three months of 2020, topping expectations of a 0.5% rise. However, this still was a marked slowdown in the economy's rebound from the Covid-19 health crisis, following a third-quarter when GDP rose by 16%.
For the whole of 2020, UK GDP fell by a record 9.9%, signalling just how badly the nation's economy has been hurt by the virus pandemic.
Annually, the UK's economic decline in the fourth quarter was less than what was forecast by market consensus. The UK's GDP was 7.8% lower year-on-year in the fourth quarter, compared to an 8.1% fall forecast.
"The country will avoid a double dip recession as a result of the encouraging performance in Q4 as businesses adapted well to the new environment. But it's all up from here after a very impressive vaccine rollout which should enable a powerful recovery in the coming quarters," OANDA Europe Senior Market Analyst Craig Erlam said.
The dollar was stronger on Friday, recouping some of its recent losses.
The pound was quoted at USD1.3786 midday on Friday in the UK, down from USD1.3815 at the London equities close on Thursday.
The euro stood at USD1.2102, down from USD1.2130 at the European equities close. Against the yen, the dollar was trading at JPY105.00, up from JPY104.75.
The EU's EUR672.5-billion economic recovery package received its final approval on Friday as the heads of the European Parliament and the EU Council inked the document.
A large chunk of this money - EUR312.5 billion - will be distributed in grants for investments and reforms in the 27 countries of the bloc.
US futures were lower on Friday ahead of a key consumer confidence print and as investors eye developments related to US President Joe Biden's USD1.9 trillion Covid-19 relief bill.
The Dow Jones Industrial Average and S&P 500 are both called down 0.3%. The Nasdaq Composite is called 0.2% lower.
Hopes for Biden's stimulus package may have been boosted after data on Thursday showed 793,000 first-time claims for unemployment benefits in the week ended February 6, well above market expectations of 757,000.
The US Michigan consumer sentiment index is released at 1500 GMT on Friday.
On the London Stock Exchange, shares in travel firms were lower with investors mindful of Covid-19 variants.
"Recent value-stock gains have been built on the notion that the vaccination programme and reopening process is linear and predictable by nature, yet strains in South Africa and now Bristol highlight the potential to derail that presumption," IG's Mahoney commented.
British Airways owner International Consolidated Airlines Group fell 2.3%, among the worst performing large-caps in London. Bus and rail operator FirstGroup was down 1.6% and Anglo-German tour operator Tui lost 4.3%.
In addition, online travel agent Lastminute.com has been threatened with court action by the UK competition watchdog for failing to pay out refunds to some customers.
The company had vowed to make GBP7 million of payments by the end of January to 9,000 customers who had holidays cancelled due to the pandemic under a formal agreement with the Competition & Markets Authority.
But the UK regulator said GBP1 million owed to 2,600 customers remains outstanding. Unless the money is paid out within seven days, court action will follow, it said.
G4S shares were up 1.1% after London's Takeover Panel stepped in to put in place an auction procedure to resolve an ongoing takeover saga.
Last month, G4S agreed to be taken over by Allied Universal in a GBP3.8 billion deal, but the cash offer has been extended and remains open for acceptances until March 6.
GardaWorld's rival offer of 235p per share, valuing the London-listed firm at GBP3.68 billion, also has been extended and remains open for acceptances until March 6.
Brent oil was quoted at USD60.66, down from USD61.35 a barrel at the London equities close on Thursday. Gold was quoted at USD1,818.79, down from USD1,836.55.
By Eric Cunha; ericcunha@alliancenews.com
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