European shares slip on growth jitters; French stocks lead decline

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 4, 2024. REUTERS/Staff

By Shubham Batra and Lisa Pauline Mattackal

(Reuters) -European stocks fell on Thursday as mixed economic data spurred worries about global growth and offset gains in interest rate-sensitive sectors, with France's CAC 40 leading national declines.

The pan-European STOXX 600 index fell 0.5%, with sectors tracking healthcare, chemicals and personal goods all falling over 1%.

Economic worries continued to weigh on sentiment. German industrial orders rose more than expected in July, but euro zone retail sales slipped on an annual basis.

That, combined with some signs of weakening in the U.S. labour market, kept investors cautious ahead of key U.S. nonfarm payrolls data on Friday.

"The industrial orders were good news for Germany but everybody right now is focused on U.S. job data ... tension in the market is growing higher into tomorrow's U.S. job report which is why we see a continued sell off in the U.S. and European stock markets," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

France's benchmark index slipped 0.9%, its third consecutive loss, as worries about a slowdown in top consumer China weighed on luxury stocks.

An index of luxury stocks dropped over 3%, with LVMH and Hermes International (OTC:HESAF) slumping 3.6% and 6.4%, respectively.

The selection of Michel Barnier, the EU's former Brexit negotiator, as France's prime minister helped lift some bank stocks and government bonds in hopes it would soothe the country's political turmoil since President Emmanuel Macron called a snap election in June.

"Having a Prime Minister is a good sign and it's going to calm nerves in the market, but this period of (political) uncertainty has damaged investor appetite for France," Ozkardeskaya said.

Germany's benchmark DAX index was flat. The country's Ifo Institute said the economy was likely to stagnate this year, in contrast to previous forecasts of 0.4% growth.

The rate-sensitive utility and real estate sectors were the top gainers, both up over 1% as investors continued to expect rate cuts this month from both the European Central Bank and the Federal Reserve.

Economists polled by Reuters expect the ECB to cut its deposit rate by 25 basis points on Sept. 12 and again in December.

Among individual stocks, Airbus SE (OTC:EADSY) fell 1.4% after Europe's air safety regulator said it would call for inspections on at least part of its A350 fleet after an engine part failed during a Cathay Pacific flight.

Vistry surged 8.5% as the British homebuilder said it would buy back shares worth 130 million pounds following a 7% rise in half-year earnings.

Technology shares broadly fell, extending their slide from the previous session, with ASML (AS:ASML) Holdings falling 2.2%, tracking weakness in U.S. semiconductor stocks.