British pound wins GDP boost but European equities sag

British pound wins GDP boost but European equities sagThe British pound rallied briefly Thursday on brighter-than-expected economic growth data, while European stock markets sagged amid a dearth of eurozone news.

Sterling bounced after official data showed that Britain’s economy grew by a better-than-expected 0.5 percent in the three months following the country’s referendum in favour of exiting the European Union.

The currency shot as high as $1.2272 and strengthened to just above 89 pence against the euro in morning deals, before trimming gains.

“The GDP data initially boosted the pound which had a negative impact on the FTSE and pushed it into the red,” Oanda analyst Craig Erlam told AFP.

“The FTSE appears to benefit more from declines in the pound as opposed to good economic data at the moment, as it has substantial exposure outside of the UK.”

The London stock market was pulled lower because the stronger pound weighs on exporters, making their goods more expensive for buyers using weaker currencies.

However the pound has plunged to multi-year lows against the dollar and euro in the wake of the Brexit vote on June 23, boosting multinationals.

Around midday Thursday, London’s FTSE 100 was down 0.1 percent in value compared with Wednesday’s close.

In the eurozone, Frankfurt’s DAX 30 also shed 0.1 percent and the Paris CAC 40 was down 0.3 percent.

“Indices are looking quite vulnerable to downside moves at the moment… and what is lacking today is any catalyst that could provide the spark for such a move,” Erlam added.

Deutsche Bank surprises

Despite Frankfurt being down overall, Deutsche Bank shares firmed 0.1 percent to 13.31 euros after the troubled German lender posted a surprise third-quarter net profit.

Deutsche’s financial health has been in the spotlight ever since the US Department of Justice last month asked for an unaffordable $14 billion fine over its role in the subprime mortgage crisis — sparking fears it might have to raise fresh capital.

“A surprise move into profit for Deutsche Bank has allayed some of the fears that sent shares in Germany’s biggest bank into freefall,” noted IG analyst Joshua Mahony.

Most Asian stock markets turned lower for a second day on Thursday, with energy firms struggling after another sell-off in oil fuelled by concerns about a planned output cut.

Crude prices are languishing at three-month lows after OPEC member Iraq and non-member Russia suggested this week they would not take part in any limitations, despite a painful global supply glut.

Their comments have raised questions about the viability of last month’s agreement by oil cartel OPEC to reduce output, that had sent prices soaring.

While edging up slightly Thursday, oil prices have tumbled more than three percent this week and news that US stockpiles had fallen more than expected last week was unable to provide much support.