European stocks fall; FTSE 100 choppy after UK economy shrinks more than expected

The British pound was roughly flat against the U.S. dollar, though dipped 0.3% against the euro after the national statistics office said the U.K. economy contracted 0.3% in April while the country’s trade deficit widened.

Yields on U.K. government bonds were broadly lower, with the 10-year gilt yield down 4 basis points and the 2-year yield down around 3 basis points.

This week, investors have also been digesting the U.K. government’s spending review, which committed more money toward housing and transport, and data showing cooling wage growth and a fall in job vacancies, which led markets to fully price in a further half-percentage-point in interest rate cuts this year.

— Jenni Reid

European stock markets have opened sharply lower, with the Stoxx 600 index falling 0.42% and almost all sectors in the red led by travel, down 1.5%.

U.K. goods exports to the U.S. dropped £2 billion ($2.71 billion) in April, according to the Office for National Statistics, the biggest monthly drop since records began in 1997.

The value of exports was the lowest since February 2022, with the ONS saying the shift was “likely linked to the implementation of tariffs on goods imported to the United States.”

U.S. imports to the U.K. fell by £400 million for the month.

The U.K. and U.S. announced the outline of a trade deal at the start of May, but the agreement still imposed 10% blanket tariffs on British goods sent stateside and has not yet been fully implemented, leaving 25% duties on steel, aluminum and autos.

Overall, the U.K.’s trade deficit in goods rose by £4.4 billion to £60 billion in the three months to April, as its trade surplus in services dipped by £500 million to £48.5 billion.

— Jenni Reid

U.K. Chancellor Rachel Reeves said the latest monthly GDP print was “clearly disappointing” after data showed the economy shrank 0.3% contraction in April, on a monthly basis.

“Our number one mission is delivering growth to put more money in people’s pockets through our Plan for Change, and while these numbers are clearly disappointing, I’m determined to deliver on that mission,” she said in a statement out Thursday.

Reeves said the spending review she delivered to lawmakers on Wednesday, in which she laid out expenditure and investment plans for all government departments for the next few years, showed the Treasury was ambitious to deliver jobs and growth.

“Whether that’s improving city region transport, a record investment in affordable homes or funding Sizewell C nuclear power station. We’re investing in Britain’s renewal to make working people better off,” she commented Thursday.

— Holly Ellyatt

Mounting trade tensions and tariffs have become the single biggest worry for global investors, overshadowing all other economic risks, a new survey shows.

Nearly two-thirds (63%) of institutional investors and wealth managers identified trade levies as the most significant macroeconomic concern impacting their strategy, according to a survey published by British investment manager Schroders.

CNBC’s coverage of the VivaTech summit in Paris continues on Thursday. We’ll be reporting from Goldman Sachs’ annual European Financials Conference in Berlin too.

On the data front, the U.K.’s monthly gross domestic product print is due Thursday morning, and earnings are set to come from retail giant Tesco.

— Holly Ellyatt

Welcome to CNBC’s live blog covering European financial market action and the latest regional and global business news, data and earnings.

Futures data from IG suggests London’s FTSE will open 33 points lower at 8,838, Germany’s DAX down 189 points at 23,783, France’s CAC 40 down 44 points at 7,732 and Italy’s FTSE MIB 282 points lower at 39,858.

— Holly Ellyatt