European shares blended; U.Ok. retail gross sales impress, however U.S. debt talks proceed

© Reuters – European stock markets traded in a mixed fashion Friday, helped by better-than-expected British retail sales while a deal to raise the U.S. debt ceiling looks set to go to the wire.

At 03:40 ET (07:40 GMT), the  index in Germany traded 0.2% lower, the  in France fell 0.3%, while the  in the U.K. climbed 0.1%.

Data released Thursday showed that in the U.K. rose 0.5% on the month in April, more than expected, with consumers remaining surprisingly resilient in the face of a cost-of-living squeeze.

Sales had slumped 1.2% in March when heavy rain kept people home.

Sentiment was also boosted by a Reuters report that suggested negotiators appear to be closing in on a deal that would raise the government’s $31.4 trillion debt ceiling for two years, with just $70 billion separating the groups on a total figure that would be well over $1 trillion. This would avert an economically damaging default.

That said, any agreement would have to pass the Republican-controlled House of Representatives and the Democratic-controlled Senate, with the June 1 deadline fast approaching.

Still, overall sentiment remains weak after Thursday’s data showed a surprise 0.3% drop in during the first three months of 2023, a second straight quarterly retreat and thus a recession in the region’s largest economy.

The region’s central bankers also show no signs of slowing their prolonged aggressive monetary tightening cycles.

“In order to banish the specter of inflation, we in the Eurosystem have acted resolutely,” Bundesbank President Joachim Nagel said Thursday. “The ECB Governing Council will continue on this monetary-tightening path to overcome high inflation.” 

The quarterly earnings season is coming to a close, with no major numbers scheduled this Friday. 

However, Lufthansa (ETR:) stock edged lower after the German airline announced on Thursday it will take a 41% stake in ITA Airways, as it looks to compete with low-cost airlines in the wake of costly COVID-19 pandemic.

TotalEnergies stock fell 0.4% after several hundred climate activists attempted to disrupt the oil major’s annual shareholder meeting.

Oil prices stabilized Friday, following the previous session’s weakness as Russia played down the prospect of further OPEC+ production cuts at its meeting next month.

Russian Deputy Prime Minister Alexander Novak said on Thursday he expects no new steps from the group of top producers at the June 4 meeting, undermining remarks from Saudi Energy Minister Prince Abdulaziz bin Salman earlier in the week that speculators should “watch out.”

By 03:40 ET, futures traded flat at $71.83 a barrel, while the contract dropped 0.2% to $76.09. 

Both benchmarks were still on course for small gains this week on signs of tightening U.S. supply and improving fuel demand in the world’s largest oil consumer.

Additionally, rose 0.6% to $1,955.35/oz, while traded 0.1% higher at 1.0734.

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