(Sharecast News) – European shares were hovering near the flatline on the last trading day before Christmas, as Britain sailed towards recession and a cut in sales forecasts at Nike kicked sportswear manufacturers lower.
The pan-European Stoxx 600 index was down 0.10% at 476.46 in early deals. The UK economy shrank in the third quarter, according to figures released on Friday by the Office for National Statistics, raising the risk of recession.
The economy contracted by 0.1% in the period from July to September, down from a previous estimate of no growth, with the services sector contracted 0.2%, revised down from a first estimate of a 0.1% decline.
Data also showed that there was no economic growth in the second quarter, down from a previous estimate of 0.2% growth.
Meanwhile, November retail sales grew 1.3% as heavy discounting on Black Friday encouraged hard-pressed consumers to part with their cash.
“Some of the UK’s biggest stocks rely on consumers spending on non-essentials, which makes this development a tough one. It’s not a total surprise though, with inflation still way ahead of central targets and interest rates chipping away at household resilience,” said Hargreaves Lansdown analyst Sophie Lund-Yates.
“The contraction in the economy increases the chances of an official recession coming down the pipes in the new year, but a lot will rest on just how much of a merry Christmas we’ve had.”
In equity news, shares in Adidas, Puma and JD Sports Fashion fell as Nike cut its full-year sales forecast.
Prosus plunged after Chinese regulators announced plans to impose restrictions in the online gaming industry.
Reporting by Frank Prenesti for Sharecast.com
