China's crackdown on the private education and tech sectors has raised concerns that it is planning to target other industries

London (AFP) - Europe’s major stock markets sank Friday, chasing Asia lower as investors digested earnings and took profits from strong gains the previous day, despite the eurozone’s economic rebound.

Heading toward midday, London stocks sank 0.9 percent, with virus-hit airline conglomerate IAG down 7.0 percent after posting a 2.0-billion-euro first-half loss.

In early afternoon eurozone deals, Frankfurt dropped 1.0 percent and Paris slid 0.4 percent despite upbeat economic data.

All three indices had rebounded sharply Thursday on a barrage of upbeat corporate results and the brightening economic outlook.

“There’s been a lot of optimism in the markets recently and this may simply be a little bit of profit taking after a very busy period,” OANDA analyst Craig Erlam told AFP.

“It may be that the various warnings around the near-term outlooks from big tech companies this week, combined with a cautious Federal Reserve and mixed data, has dampened sentiment a little going into the summer holiday period,” he added.

The eurozone economy rebounded by a strong two percent in the second quarter, official data showed Friday, as reopened businesses lifted activity out of the pandemic doldrums.

The expansion in Europe was stronger than in the United States, where the economy grew by 1.6 percent compared to the previous quarter and China, which saw a 1.3 percent expansion.

However, eurozone inflation rose to 2.2 percent, above the European Central Bank’s target of near, but below, two percent.

That stoked long-running concerns of global interest rate hikes to curb runaway consumer prices, but economists remain cautious.

“Yes, inflation in the eurozone appears to be rising – and it will increase further in the next few months – but base effects from last year’s VAT cut in Germany is a key driver,” noted Claus Vistesen at Pantheon Macroeconomics.

Equities also fell in Asia, setting them up to end a volatile week on a negative note as China’s regulatory crackdown continued to spook investors.

The losses came despite a positive lead from Wall Street, where traders were cheered by data showing the US economy returned to its pre-pandemic size in the second quarter but fell short of forecasts.

The data eased pressure on the Fed to begin tapering its ultra-loose monetary policies.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.9 percent at 7,015.41 points

Frankfurt - DAX 30: DOWN 1.0 percent at 15,487.66

Paris - CAC 40: DOWN 0.4 percent at 6,609.96

EURO STOXX 50: DOWN 0.7 percent at 4,089.22

Tokyo - Nikkei 225: DOWN 1.8 percent at 27,283.59 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 25,961.03 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,397.36 (close)

New York - Dow: UP 0.4 percent at 35,084.53 (close)

Euro/dollar: UP at $1.1905 from $1.1887 at 2100 GMT

Euro/pound: UP at 85.19 pence from 85.15 pence

Pound/dollar: UP at $1.3975 from $1.3959

Dollar/yen: UP at 109.54 yen from 109.48 yen

Brent North Sea crude: DOWN 0.2 percent at $75.88 per barrel

West Texas Intermediate: DOWN 0.3 percent at $73.39 per barrel

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