European stocks rebound as focus remains on Middle East; UK retail sales slide

U.S. asset management giant Apollo is set to provide a £4.5 billion ($6 billion) loan to plug a shortfall facing U.K. nuclear project Hinkley Point.

The deal was first reported by the Financial Times on Friday and supported by two sources speaking to CNBC on condition of anonymity because of the sensitivity of the matter.

The deal would be among the biggest private capital investments in a project of U.K. national interest.

Read more here.

— Jenni Reid and Spriha Srivastava

Eutelsat shares were 11% higher at 9:07 a.m. in London, after the European satellite operator announced a 1.35 billion euro ($1.55 billion) capital raise backed by the French state and other investors.

The company said that, along with a debt refinancing plan, the capital increase would support its investment in its existing Low Earth Orbit (LEO) capabilities, which are focused on business-to-business and business-to-government operations.

“As the only European operator with a fully operational LEO network, Eutelsat is positioned to play a strategic role in supporting critical sectors such as military communications, cyber-resilience, and secure government connectivity, fully aligned with European Union and NATO objectives for strategic autonomy,” it said in the release.

Other investors, including the U.K., “could join the capital raise in due course,” it added.

Writing on X, French President Emmanuel Macron said that by strengthening Eutelsat’s position France was “ensuring its strategic independence and paving the way for Europe’s” and noted he would discuss the decision at the Paris Air Show on Friday.

Eutelsat shares have been hugely volatile this year, experiencing an enormous spike in March on expectations that it could be a European alternative to Elon Musk’s Starlink, and subsequently cooling.

Read more on that from CNBC’s Ryan Browne.

European stock markets are looking to shake off some of the week’s losses at the Friday open, with the regional Stoxx 600 index up 0.5%, Germany’s DAX up 0.75% and the U.K.’s FTSE 100 up 0.33%.

In a reversal of the trend in recent days, most sectors are in the green — including travel, which is up 1.2% — while oil and gas shares are down 0.6%.

Along with publishing retail sales data, the U.K.’s Office for National Statistics said this morning that public borrowing hit £17.7 billion ($23.8 billion) in May, £700 higher than the previous year.

The budget deficit — defined as borrowing to fund day-to-day public sector activities, which the U.K. government has pledged to slash to zero — came in at £12.8 billion, down £1.7 billion on May 2024.

Public sector net debt excluding banks was provisionally estimated at 96.4% of gross domestic product, 0.5 percentage points higher year-on-year.

Economists have warned that weak growth, higher borrowing costs and reversals on some spending policies mean the U.K. may face more tax hikes later this year if Finance Minister Rachel Reeves is to meet her so-called “fiscal rules.”

“If current trends persist, total borrowing for the 2025–26 fiscal year could approach or exceed £150 billion — well above the Office for Budget Responsibility’s Spring forecast of £137 billion,” Joe Nellis, economic advisor at accountancy MHA, said in emailed comments.

“With limited scope for major tax rises or deep spending cuts in the short term, the Chancellor’s options to meet her fiscal rules are narrowing, especially the target to reduce debt as a share of GDP over the medium term.”

— Jenni Reid

U.K. shoppers pulled back on spending in May, with retail sales down 2.7% on the month, the steepest drop since December 2023, according to Office for National Statistics. Economists polled by Reuters expected a 0.5% decline.

It breaks a run of four straight monthly rises, which was the best streak since 2020, with retailers saying sunny weather in April helped to lift sales growth to 1.3%.

The bullion — which is considered a hedge against political and financial instability — has risen 31.2% since the start of the year, according to LSEG data.

— Amala Balakrishner