European Markets Finished Mostly Lower After Pound Flash Crash

(RTTNews) - The majority of the European markets ended Friday's session in the red. The risk appetite among investors all but disappeared after the British pound briefly plunged over 6 percent in Asian trade. The currency recovered some ground, but still finished at a new 31-year low against the U.S. dollar. The weaker than expected U.S. jobs report also had a negative impact on investor sentiment.

The weakness in the pound did provide a boost to shares of British exporters. The UK's FTSE 100 was one of the few European markets to end the session with a gain.

French president François Hollande warned the U.K.to face "tough Brexit negotiations" as it leave the EU. According to a report in the Financial Times, the French President Hollande said to the guests at the 20th anniversary of Notre Europe in Paris that the U.K. must suffer the consequences of leaving the European Union.

Some traders speculated the possibility of human error, or a so-called "fat finger" trade or a rogue automated algorithm, which adds selling pressure at a time of day where liquidity is typically low.

Stimulus measures adopted thus far has worked and the monetary policy transmission across the euro area has improved, yet policymakers stand ready to deploy all measures at their disposal to defend growth and bring inflation back to the 2 percent target, European Central Bank President Mario Draghi said Friday.

"Our very accommodative monetary policy stance provides the impetus that is necessary for the euro area recovery to strengthen and for inflation to gradually return to levels that we consider consistent with our objective," Draghi said in his statement presented at the International Monetary and Financial Committee meeting being held in Washington.

"Looking forward, we will preserve the very substantial amount of monetary support that is necessary to secure a return of inflation rates towards levels that are below, but close to, 2% without undue delay. If warranted, we will act by using all the instruments available within our mandate."

The pan-European Stoxx Europe 600 index weakened by 0.92 percent. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 0.70 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.64 percent.

The DAX of Germany dropped 0.74 percent and the CAC 40 of France fell 0.67 percent. The FTSE 100 of the U.K. gained 0.63 percent, but the SMI of Switzerland finished lower by 0.56 percent.

In Frankfurt, utility RWE fell 7.23 percent after its renewable energy unit, Innogy, debuted on the stock market.

In Paris, EDF lost 2.43 percent after raising $2.655 billion from 20 investors through a series of senior bond issues on the Taiwanese market.

In London, airline easyJet fell 3.70 percent due to brokerage downgrades after its profit warning yesterday.

Mining stocks were among the best performers, due to the drop in the value of the pound. Glencore jumped 4.27 percent and Fresnillo gained 3.16 percent. Randgold Resources increased 2.76 percent and Anglo American climbed 2.26 percent. BHP Billiton advanced 2.54 percent and Rio Tinto added 2.18 percent. Antofagasta also finished higher by 2.52 percent.

Royal Dutch Shell increased 2.17 percent and BP added 2.64 percent. Tullow Oil also closed higher by 0.77 percent.

Insurer Delta Lloyd advanced 3.40 percent in Amsterdam after it rejected an unsolicited takeover offer of 2.4 billion euros from domestic rival NN Group.

Germany's industrial production recovered at a faster than expected pace in August, figures from Destatis revealed Friday. Industrial output grew 2.5 percent month-on-month in August, reversing a fall of 1.5 percent in July. Output was expected to grow 1 percent.

France's industrial production rebounded more than expected in August, figures from the statistical office Insee showed Friday. Industrial output grew 2.1 percent in August from July, when it fell by revised 0.5 percent. This was the fastest growth since December 2014, when it advanced 3.7 percent.

Economists had forecast a moderate 0.6 percent growth after July's initially estimated decrease of 0.6 percent.

The French current account gap narrowed in August on falling visible trade deficit, the Bank of France reported Friday. The current account deficit decreased to EUR 2.1 billion from EUR 2.9 billion in July.

U.K. industrial production logged an unexpected drop in August, figures from the Office for National Statistics showed Friday. Industrial output fell 0.4 percent on a monthly basis, in contrast to a 0.1 percent rise seen in July. Economists had forecast a 0.1 percent rise for August.

The U.K visible trade deficit widened more-than-expected in August, the Office for National Statistics reported Friday. The trade in goods showed a deficit of GBP 12.1 billion in August versus a shortfall of GBP 9.5 billion in July. Economists had expected the deficit to rise to GBP 11.25 billion.

U.K. house prices rose slightly in September after two consecutive declines, survey data from the mortgage lender Halifax revealed Friday. House prices edged up 0.1 percent in September from August, when it fell 0.3 percent. This was the first increase in three months. Economists had forecast prices to remain flat.

With an increase in private sector employment partly offset by a drop in government jobs, the Labor Department released a report on Friday showing that employment in the U.S. rose by less than expected in the month of September.

The report said non-farm payroll employment climbed by 156,000 jobs in September compared to economist estimates for an increase of about 176,000 jobs.

The Labor Department also said the unemployment rate edged up to 5.0 percent in September from 4.9 percent in August. Economists had expected the unemployment rate to remain unchanged.

Wholesale inventories in the U.S. fell by slightly more than anticipated in the month of August, according to a report released by the Commerce Department on Friday. The Commerce Department said wholesale inventories dipped by 0.2 percent in August after edging down by 0.1 percent in July.

Economists had expected inventories to slip by 0.1 percent after originally showing virtually no change in the previous month.