European Shares Slip As OECD Warns Of Second Virus Wave

European stocks fell slightly on Wednesday after the Organization for Economic Cooperation and Development (OECD) forecast the global economy would contract 6.0 percent this year before bouncing back with 5.2 percent growth in 2021.

As the threat of a second wave of contagion keeps uncertainty high, OECD chief economist Laurence Boone wrote in an introduction to the refreshed outlook that now was no time to fan the flames of trade tensions and governments should cooperate on a treatment and vaccine for the virus.

Investors also looked ahead to comments by Federal Reserve Chairman Jerome Powell and the central bank’s economic forecasts later in the day.

The pan European Stoxx 600 slipped 0.2 percent to 368.75 after declining 1.2 percent in the previous session.

The German DAX dropped 0.4 percent, France’s CAC 40 index slid 0.1 percent and the U.K.’s FTSE 100 was down 0.2 percent.

Banks were moving higher after Reuters reported that the European Central Bank is drawing up a “bad bank” scheme to cope with potentially hundreds of billions of euros of unpaid loans due to the coronavirus crisis.

Airbus SE rose over 1 percent after the French government unveiled a €15 billion ($17 billion) support plan for the aerospace industry.

Spanish fashion retailer Inditex rose nearly 3 percent. After booking its first ever loss in a quarter due to the pandemic, the company said that trends were improving in May.

HSBC Holdings declined 1.7 percent after U.S. Secretary of State Michael Pompeo criticized the bank for backing China’s move to impose national security legislation in Hong Kong.

Paragon Banking Group dropped 1.4 percent after its first-half profit before tax fell 20.7 percent to 57.1 million pounds from last year’s 72.0 million pounds.

Shaftesbury slumped 4.6 percent as the real estate investment trust reported a loss before tax of 287.6 million pounds for the 6 months ended 31 March 2020 compared to profit of 38.7 million pounds, prior year.

Hornbach Holding AG & Co. KGaA Group surged 6.3 percent after reporting substantial sales and earnings growth in the first quarter of 2020/21.

In economic news, French industrial production dropped 20.1 percent from March, when output was down 16.2 percent, data from the statistical office Insee showed. Economists had forecast a monthly fall of 20 percent in April.

Similarly, manufacturing output decreased 21.9 percent on a monthly basis after easing 18.3 percent in March.

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