European indices bounce back, as call for safe-haven currencies is strong

London — European shares recovered on Friday after weak US and Chinese economic data earlier sent global equity markets into a dive.

After opening lower, Europe’s Stoxx 600 nudged up 0.2% despite weakness in German equities. Demand for safe-haven currencies remained strong.

Stocks fell after a US report that retail sales had dropped in December to their lowest since 2009 and by data on Chinese producer prices, which were little changed for a seventh straight month in January.

Germany’s main stock index, which is exposed to the Chinese economy because of its large number of exporters, was down 0.2% by 9.32am GMT. It had fallen as much as 0.5%.

European car stocks, a bellwether for the continent’s economy, fell 1% as sales dropped and the deadline approached for a US commerce department that could lead to the imposition of tariffs.

“After hot markets of late, a little bit of cold water has been poured on bourses over the last 24 hours,” Deutsche Bank’s strategist Jim Reid said.

The slow start in European shares reflected nerves across global equity markets. MSCI’s world equity index, which tracks shares in 47 countries, was flat.

Emerging markets were set for their first back-to-back weekly loss since late last year. The MSCIEF index of emerging market stocks dropped 0.8%.

Investors in Asia took fright early after the US retail sales report. Asia-Pacific shares outside Japan fell 1.1% as markets in Seoul, Tokyo and Shanghai all lost ground.

Worries about the US, which many considered a bright spot in the world economy, offset some optimism over trade talks in Beijing between the US and China.

The two top US negotiators were due to meet Chinese President Xi Jinping on Friday, but no decision has been taken to extend a March 1 deadline for a deal.

US treasury secretary Steven Mnuchin said in a tweet on Friday that he and US trade representative Robert Lighthizer had “productive meetings” with China’s vice-premier Liu He.

Safe haven

The Japanese yen and other safe-haven currencies made gains as the market awaited developments in the trade talks. The dollar remained fairly robust in spite of the U.S. retail figures, trading up 0.2% at 97.1 against a basket of major currencies.