Europe midday: Shares down on gloomy Bundesbank forecast, weak UK data

(Sharecast News) - European shares were lower on Friday as traders assessed a bigger-than-expected fall in UK GDP, German exports fell more than forecast and the Bundesbank slashed its growth estimates for Europe's biggest economy. The pan-regional Stoxx 600 index was down 0.17% at 518.32 points. The EuroStoxx50, which covers the eurozone, was up 0.3% to 4,980.

Official data earlier showed the UK economy shrank by 0.1% in October, suggesting Finance Minister Rachel Reeves faces a bigger slowdown than anticipated.

The contraction followed a 0.1% decline in September, and versus expectations for 0.1% growth. Official figures showed that production output fell by 0.6% due to a decline in manufacturing and mining and quarrying output, following a fall of 0.5% in September.

In the eurozone, industrial production stagnated in October, recording 0.0% month-on-month growth, in line with expectations.

Meanwhile in Germany, Bundesbank President Joachim Nagel said the economy will shrink this year and will stagnate over the course of 2025, adding that a potential trade war with the US could make matters worse.

In its December forecast, the central bank slashed its forecasts and projected a contraction of 0.2 % - compared with June expectations of 0.3% growth - and only a slight expansion of 0.2 % next year. In 2026 and 2027, the economy then sees somewhat stronger growth, of 0.8 % and 0.9 %, respectively.

"The German economy is not only struggling with persistent economic headwinds but also with structural problems," Nagel said. "The labour market, too, is now responding noticeably to the protracted weakness of economic activity."

German exports In October fell 2.8% - versus expectations of a 2% decline - and imports dropped 0.1% month on month on a seasonally adjusted basis, according to official data published on Friday.

Exports also decreased by 2.8% from October 2023 while imports rose by 1.7%, the Federal statistics office Destatis added.

Exported goods were worth €124.6bn in the month, while imports were worth €111.2bn. The foreign trade balance showed a surplus of €13.4bn, compared with €16.9bn in September and €18.9bn in October 2023.

In equity news, shares in UK-listed Tullow Oil slumped onnews that US oil and gas company Kosmos Energy was in "very preliminary" talks for an all-share takeover of the West Africa-focused explorer and producer.

Munich Re gained as the German reinsurer said it was targeting €6bn in net profit for next year.

Reporting by Frank Prenesti for Sharecast.com