(Bloomberg) -- European stocks fell on Friday as sectors exposed to China retreated, trimming their two-week advance.
The Stoxx 600 Index ended the session with 0.5% decline, with the benchmark up only about 0.2% on the week. Luxury goods makers were among the biggest laggards amid concerns over China’s economy, with the onshore yuan weakening past a key milestone.
Automakers also underperformed as some electric-vehicle models that had previously received US tax credits failed to make it into the new list under tougher rules. Financials and energy sectors were among the biggest outperformers.
A measure of US factory activity advanced for a second month in December as orders and production picked up. Still, the reading remained below 50, indicating activity continues to shrink.
European stocks have struggled to sustain a rally since mid-2024, pressured by weak regional economies and political uncertainty. Investors are awaiting clarity on US trade policies following the swearing in of President-elect Donald Trump later this month.
The region’s cyclical stocks are starting to come under pressure from weakening consumer confidence.
“We think tourism and consumer services more broadly are the main bright spot in an economy that continues to be hit by weak manufacturing activity and a lack of export demand,” said Panmure Liberum strategist Joachim Klement. “Going into 2025, we focus on services companies rather than industrials or consumer goods.”
Among individual stocks, Airbus SE dropped after it fell just short of meeting its annual delivery target for 2024 by handing over about 760 aircraft to customers.
For more on equity markets:
- Expensive Cyclicals at Mercy of Uncertain Economy: Taking Stock
- Europe M&A Weekly Agenda: Healthineers, Swisscom, Conferences
- US Stock Futures Unchanged; Resources Connection Gains
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--With assistance from Michael Msika and Kit Rees.
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