LONDON: European stocks slipped lower on Friday, with utility RWE underperforming after broker downgrades, and remained on course for their worst week in more than a month following China's currency devaluation.
RWE fell 1.7 percent after Natixis and UBS cut their price targets on RWE shares, but payment services company Ingenico rose 5.5 percent after gaining entry to the MSCI World Index, a key benchmark for many investors. The euro zone's blue-chip Euro STOXX 50 index fell 0.4 percent.
The broader pan-European FTSEurofirst 300 index was flat and remained down by around 3 percent over the course of the week. The FTSEurofirst was also on course for its worst week in more than a month, after China's devaluation of the yuan on Aug. 11 hit world stock markets. "It was quite a shock what the Chinese did - there was no pre-warning. As the dust is still settling, the market is pausing here," said Markus Huber, senior sales trader at Peregrine & Black.
Huber said any stabilisation in the yuan next week could restore confidence to markets. Both the Euro STOXX 50 and FTSEurofirst remain up around 10 percent since the start of 2015, as economic stimulus from the European Central Bank props up the region's stock markets. Morgan Stanley equity strategists said investor sentiment could also be boosted if investors interpreted China's yuan devaluation as a precursor to more action from Beijing to bolster China's economic growth.
"Any indications that China may introduce a wider stimulus program could shift sentiment from risk-off to risk-on as investors consider the potential for better global growth," Morgan Stanley's strategists wrote in a note.
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