European Stocks Dip Amid Economic Data and Policy Speculations

European stocks fell slightly at the end of a short trading week, with a focus on economic indicators and U.S. policy changes under Donald Trump. The pan-European STOXX 600 was down, but showed a weekly rise. Concerns about China's economy and upcoming U.S. presidential decisions loom large.

Amid a holiday-shortened trading week, European stocks experienced a slight decline on Friday, with market participants closely monitoring economic data for insight on future interest rate paths and policy shifts under the imminent Donald Trump administration. The pan-European STOXX 600 index dipped by 0.2% at 0922 GMT, although it was set to finish the week with a 0.7% increase bolstered by subdued trading as traders resumed post-New Year holidays.

Despite the overall decline, Swiss stocks advanced by 0.2% in their inaugural trading session of 2025, while both Germany's DAX and France's CAC 40 faced losses, slipping by 0.3% and 0.6%, respectively. Sectors exposed to Chinese markets, including mining, luxury goods, and automotive, came under pressure. This, notwithstanding Beijing's announcement of a significant boost in funding through ultra-long treasury bonds to stimulate business investments and consumer spending initiatives in 2025.

Apprehensions regarding China's economic stability and the potential U.S. trade conflict preceding Trump's January 20 inauguration add to the market's cautious stance. While U.S. stocks thrived in 2024 due to optimism surrounding artificial intelligence and Federal Reserve interest rate reductions, the STOXX 600's growth was restricted by Europe's economic slowdown and political instability in Germany and France. Traders now anxiously await U.S. manufacturing data and statements from Fed and ECB officials, impacting market movements.

(With inputs from agencies.)