UKX FTSE 100 Index

By Carla Mozee, MarketWatch

H&M plunge after sales update

Stocks across Europe were lower Friday, as retail and bank shares traveled into negative territory, putting the regional benchmark on track for a third straight loss and a decline for the week.

How markets are moving: The Stoxx Europe 600 index slipped 0.1% to 388.54, with technology and consumer services shares down the most. The utilities and telecoms sectors were the only ones advancing. On Thursday, the gauge fell 0.5% (http://www.marketwatch.com/story/european-stocks-sag-with-ecbs-final-policy-meeting-of-the-year-on-deck-2017-12-14) and marked its lowest close in a week.

For the week, the Stoxx 600 was looking at a 0.3% decline. Last week, it rose 1.4%.

On national bourses, Germany's DAX 30 index gave up 0.4% to 13,020.69 and was on course to fall 1% for the week. (http://www.marketwatch.com/story/european-stocks-step-back-from-highest-in-5-weeks-but-retailers-gain-ground-2017-12-13)France's CAC 40 fell 0.2% to 5,344.44.

Spain's IBEX 35 was up 0.1% at 10,182.50. In London, the FTSE 100 was down 2 points at 7,446.11 (http://www.marketwatch.com/story/ftse-100-struggles-for-3rd-day-as-banks-fall-but-on-course-for-weekly-advance-2017-12-15).

The euro traded at $1.1791, up from $1.1778 late Thursday.

In the bond market, the yield on Germany's 10-year government bond fell 1 basis points to 0.30%, according to Tradeweb.

Check out: What European stock-market sector looks good in 2018? (http://www.marketwatch.com/story/what-stock-market-sector-looks-good-in-2018-think-planes-trains-and-automobiles-2017-12-11)

What's moving markets: Retail stocks struggled, led by Hennes & Mauritz AB, or H&M. Its shares plunged by the most since 2001 following a disappointing sales report from the Swedish fashion retailer. At the same time, luxury goods retailer Salvatore Ferragamo SpA tumbled on concerns surrounding its outlook. The Stoxx Europe 600 Retail Index dropped 1.9%.

Meanwhile, worries surrounding Republican-led efforts in Washington to cut taxes cropped up again, sending U.S.-listed bank shares lower Thursday, and European bank stocks followed that lead Friday. Expectations for tax cuts and an overhaul in U.S. tax polices have at times boosted bank stocks worldwide throughout the last year.

Florida Sen. Marco Rubio on Thursday told Senate leaders he'll vote against the tax bill unless it includes a larger expansion of the child tax credit. Also, several Republican senators have expressed doubts about the tax overhaul ahead of an expected vote on the final bill next week, according to The Wall Street Journal. (https://www.wsj.com/articles/house-senate-republicans-reach-deal-on-final-tax-bill-1513185360)

In Brussels, EU leaders were meeting at their summit where Brexit is high on the agenda. The group is expected to give the green light for divorce talks to move onto the second phase (http://www.marketwatch.com/story/breakthrough-on-brexit-terms-opens-way-to-next-phase-of-talks-2017-12-08).

U.K. Prime Minister Theresa May this week suffered a legislative defeat as the U.K.'s lower house voted to amend the Brexit bill to give members of parliament the power to reject the final divorce deal struck with Brussels. May on Thursday reportedly said she was "disappointed" by the vote, but that Britain remains on course to exit from the European Union in 2019.

(https://www.wsj.com/articles/house-senate-republicans-reach-deal-on-final-tax-bill-1513185360)What strategists are saying: "European equity markets are slightly softer as investors mull the possibility that the U.S. tax reform bill may get derailed at the last minute," said Rebecca O'Keeffe, head of investment at Interactive Investor, in a note. "The Republicans can afford a draw in the Senate, as Vice president Mike Pence casts the deciding vote, but this deal is a key risk for markets, and its defeat, while unlikely, could cause carnage."

"The main obstacle to [a Brexit] transition deal lies within British domestic politics, rather than in negotiations between the U.K. and EU-27. As Brexit negotiations turn to the more complex task of defining a new post-Brexit UK/EU relationship in the coming year, risks to a final deal are likely to intensify rather than diminish," said Huw Pill, chief European economist at Goldman Sachs, in a note released Friday.

Stock movers: H&M shares (HM-B.SK) sank 15% after the apparel retailer said fourth-quarter sales fell to 50.39 billion Swedish kronor ($6 billion), hurt by declining visits by customers to its stores (http://www.marketwatch.com/story/hm-sales-down-as-store-visits-decline-2017-12-15) and sluggishness in embracing e-commerce. Analysts polled by FactSet had expected 54.07 billion kronor in sales.

Salvatore Ferragamo SpA (SFER.MI) dropped 7.8% after the high-end fashion retailer said it was unable to confirm mid-term targets it presented earlier this year.

Among bank stocks, shares of Société Générale SA (GLE.FR) lost 1.2%, Commerzbank AG (CBK.XE) fell 0.6% and Barclays PLC (BCS) (BCS) was down 1.4%. The Stoxx Europe 600 Bank Index was off 0.5%.

Tele2 AB (TEL2-B.SK) rose 2.3% after Deutsche Telekom AG (DTEGY) said it's reached an agreement with Tele2 under which T-Mobile Netherlands will acquire Tele2's Dutch business for 190 million euros (http://www.marketwatch.com/story/deutsche-telekom-to-buy-tele2-abs-dutch-business-2017-12-15) ($223.8 million) in cash and a stake of 25% in the combined company.

(END) Dow Jones Newswires

December 15, 2017 05:35 ET (10:35 GMT)

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