European shares hovered near one-month lows on Thursday, as concerns over a weak economic backdrop and recent heavy selling in the bond market pegged back equities.
The pan-European STOXX 600 index, which had fallen for the last five days in a row, was flat and remained near one-month lows. The STOXX 600 index is also down 7 per cent so far in 2016.
Traders cited worries that recent sell-offs in the bond market, caused by concerns that world central banks are running out of ammunition to bolster economic growth, would mean equities remained vulnerable to further pullbacks.
“Overall sentiment is slightly negative,” said Markus Huber, trader at City of London Markets Limited.
British supermarket operator Morrison rose 6.7 per cent, the top performer on the STOXX 600, after the company returned to profit growth.
“A better-than-expected increase in like-for-like sales at Morrisons supermarkets saw the company deliver a very positive set of interim results which beat forecasts,” said ETX Capital markets analyst Neil Wilson.
Zodiac Aerospace , which has issued a string of profit warnings over the last year, also rose sharply after reporting higher than expected full-year revenues.
However, shares in Next fell after the British clothing retailer warned of volatile trading as it reported a fall in first-half profits.
Rival clothing retailer H&M also fell after it reported sales growth below analyst forecasts.
Francois Savary, chief investment officer at Geneva-based fund management and consultancy firm Prime Partners, said his firm had trimmed back its equity position, given the weak economic backdrop.
“The summer rally on equities was not really backed up by volumes and we are not out of the woods yet in terms of low economic growth,” said Savary.