LONDON/MILAN (Reuters) – European shares fell on Friday despite strong euro zone factory data, after a delay to a keenly awaited U.S. tax reform bill curbed appetite for the dollar and was set to cool a rally on Wall Street.
Euro zone shares .STOXXE, which started to accelerate losses about half an hour before the release of the data, fell as much as 1.2 percent to session low before stabilizing down about 0.7 percent.
A purchasing managers’ index showed that euro zone factories had their busiest month for more than 17 years in November and raised prices at the fastest rate in more than six years.
Forward-looking indicators suggested the momentum would continue to the end of 2017, capping what is expected to be the best year for euro zone economic growth in a decade.
The DAX, Germany’s top share index, fell as much as 1.6 percent to hit its lowest level in around nine weeks before paring losses as the euro eased from the day’s highs.
Traders also pointed to month-end index re-weighting and shifts in positioning to explain the moves, which could be exacerbated by thinner trading volumes.
“Yesterday was a pretty heavy trading day with month-end profit taking as we approach the end of the year. I wouldn’t read too much into moves in the next session,” said Ameet Patel, analyst at Northern Trust. “Positioning is skewed towards tax reform not happening.”
Gold edged higher as the dollar eased but was still trading near the 3-1/2-week low touched in the previous session, with investors flocking to riskier assets. Spot gold XAU= was up 0.07 percent at $1,275.20 an ounce.
In emerging markets, Turkish lira and bank stocks fell on Friday, extending losses after U.S. trial testimony implicated President Tayyip Erdogan in a plan to help Iran evade sanctions.
Elsewhere, investors were also puzzled by a sharp, unexplained move this week in a key European money market rate.
The Euro Over Night Index Average (EONIA) has spiked 8 basis points since the start of the week to its highest since mid-March at minus 24 basis points, Reuters data showed.
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