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

London (AFP) - Major stock markets declined Friday as investors digested earnings and took profits from strong gains the previous day, despite the eurozone’s economic rebound.

Growing expectations that the US Federal Reserve will begin to withdraw exceptional monetary stimulus undermined market sentiment as well, analysts said.

As European trading ended the week, London stocks were off by 0.7 percent, with virus-hit airline conglomerate IAG down 7.4 percent after posting a 2.0-billion-euro first-half loss.

Frankfurt dropped by 0.6 percent and Paris was 0.3-percent lower despite upbeat economic data.

In New York, the Dow Jones index was also lower in midday exchanges.

“The market sees favourable indicators, but they all raise questions over the US central bank’s policies, since if in fact the economy is doing better, it no longer needs the exceptional crisis measures,” commented Alexandre Baradez, an analyst at IG France.

“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.

In the US, inflation stabilized in June at around four percent on a 12-month basis.

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” in Europe, noted Claus Vistesen at Pantheon Macroeconomics.

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

- Key figures around 1350 GMT -

New York - Dow: DOWN 0.4 percent at 34,957.54 points

EURO STOXX 50: DOWN 0.7 percent at 4,089.30

London - FTSE 100: DOWN 0.7 percent at 7,032.30 (close)

Frankfurt - DAX 30: DOWN 0.6 percent at 15,544.39 (close)

Paris - CAC 40: DOWN 0.3 percent at 6,612.76 (close)

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)

Euro/dollar: DOWN at $1.1863 from $1.1887 at 2100 GMT

Euro/pound: UP at 85.33 pence from 85.15 pence

Pound/dollar: DOWN at $1.3902 from $1.3959

Dollar/yen: UP at 109.72 yen from 109.48 yen

Brent North Sea crude: UP 0.3 percent at $76.29 per barrel

West Texas Intermediate: UP 0.1 percent at $73.68 per barrel

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