Europe markets lower as investors digest ECB comments, Austria lockdown; banks down 3%

LONDON — European markets were lower on Friday, as investors monitored the outlook for inflation and central bank comments, along with a resurgence of Covid-19 on the continent.

The pan-European Stoxx 600 was down 0.4% by mid-afternoon trade, having started the day on a positive note. Health care stocks stocks added 1.1% while banks plunged 3% to lead losses following comments from European Central Bank President Christine Lagarde

The rapid spread of Covid in Europe is once again front and center, with multiple countries experiencing record daily caseloads, imposing partial lockdowns and tightening rules on the unvaccinated

Germany on Thursday announced more restrictions for unvaccinated people as a fourth wave sent cases to a record, before Austria announced Friday that it will re-enter a full national lockdown

Austria’s ATX index plunged 3.4% by mid-afternoon, on track for its worst day in more than a year

Shares in Asia-Pacific were mixed on Friday, with Hong Kong stocks falling sharply as several of the region’s biggest tech names came under pressure. Alibaba’s Hong Kong-listed shares plunged more than 10% as the technology behemoth missed revenue and earnings expectations

Stateside, stock futures reversed course to trade in mostly negative territory following the announcement out of Austria

Back in Europe, ECB President Lagarde on Friday reinforced her view that euro zone inflation will fade, and said the ECB should not look to tighten monetary policy as it could hamper the bloc’s recovery

As well as taking some of the wind out of the stock market’s sails, Lagarde’s comments and the news of new Covid restrictions dented the euro gave up 0.7% to the dollar by mid-morning

On the data front, U.K. retail sales increased 0.8% month-on-month in October, slightly exceeding the 0.5% expected by economists in a Reuters poll. Excluding fuel, sales grew by 1.6% on the month against a 0.6% forecast, with the country facing spiking energy prices

Investors were also monitoring the latter stages of corporate earnings season, with Kingfisher among those reporting on Friday

The British retailer posted a 2.4% slide in third-quarter sales but said the final quarter of the year was off to a strong start. Kingfisher shares fell 4% by early afternoon

Shares of British online grocer Ocado climbed more than 8% following news of fresh Covid-19 restrictions in Europe. Online supermarkets and food delivery companies advanced across the board

Meanwhile the news sent British Airways parent IAG and airplane engine manufacturer Rolls-Royce tumbling 5.8% amid a broad decline for travel stocks

Deutsche Bank shed 5.4% to lead the banking sector losses following Lagarde’s interest rate remarks

At the top of the Stoxx 600, British e-commerce company THG jumped more than 11%