European stocks retreat at end of strong week for global equities

European stock markets retreated Friday as investors banked profits from the week's strong rally in global equities as governments and central banks step up action to bolster an economy battered by the coronavirus pandemic.

There were more gains however for most Asian indices, while the dollar extended losses.

Approaching the half-way stage, Europe's main stock markets were down on average by more than three percent -- but like indices around the world were set to finish the week strongly higher overall.

"European markets have pulled back... with caution being the order of the day after such a good rally," said Neil Wilson, chief market analyst at trading group Markets.com.

"Stimulus efforts have calmed markets" this week, Wilson said, noting however that investors were looking to bank profits ahead of the weekend pause.

While the number of people contracting COVID-19 continues to escalate, the support measures which the G20 said amounted to $5 trillion, have given traders hope that the expected global recession will be sharp but short.

Even news that a record 3.3 million Americans claimed unemployment benefits last week -- smashing the previous all-time high of 695,000 in 1982 -- was unable to derail a rally in New York with the Dow and S&P 500 up more than six percent Thursday.

The S&P 500 has now recorded its quickest three-day advance in nine decades.

Dan Skelly at Morgan Stanley Wealth Management said stocks, which have been clobbered in recent weeks, were showing signs of forming a bottom.

"While we do believe this will be possibly the sharpest recession in history, it may also be the shortest, so there is room to be optimistic for a second-half rebound," he told Bloomberg TV.

The advance on Wall Street extended into Asia, where Tokyo finished 3.9 percent higher on Friday.

However, not all Asian markets were able to sustain the rally, with some paring earlier gains and others going into negative territory.

Mumbai fell 1.5 percent as investors brushed off a deep interest rate cut by the Indian central bank, while Sydney went into the weekend on the back of a 5.3 percent loss.

Support this week has come largely from a $2-trillion US stimulus bill that is making its way through Congress and is expected to be passed by the House of Representatives Friday before being signed off by President Donald Trump.

"For investors, this package should be good for US equities and other risk assets as it should leave US corporations in a better position to weather the economic downturn and thrive in the rebound," said David Kelly, at JP Morgan Asset Management.

Also on Thursday, Federal Reserve chief Jerome Powell said the US central bank would continue to "aggressively" pump liquidity into the economy.

The Fed's promise to effectively print cash has sent the dollar tumbling this week and it continued to fall mostly across the board Friday, with higher-yielding, riskier units enjoying some respite.

The Mexican peso jumped more than three percent against the greenback.

The euro has meanwhile been weakened by Germany's rescue package. The upper house of Germany's parliament on Friday approved almost 1.1 trillion euros ($1.2 trillion) to shield Europe's largest economy from the impact of the pandemic.

Elsewhere, oil prices steadied, a day after taking another severe hit from ongoing worries about the impact of the virus on demand as well as the price war between major producers Russia and Saudi Arabia.

London - FTSE 100: DOWN 3.9 percent at 5,590.22 points Frankfurt - DAX 30: DOWN 2.3 percent at 9,770.76 Paris - CAC 40: DOWN 3.5 percent at 4,386.37 Milan - FTSE MIB: DOWN 2.2 percent at 16,993.62 Madrid - IBEX 35: DOWN 3.0 percent at 6,823.30 EURO STOXX 50: DOWN 3.1 percent at 2,760.65 Tokyo - Nikkei 225: UP 3.9 percent at 19,389.43 (close) Hong Kong - Hang Seng: UP 0.6 percent at 23,484.28 (close) Shanghai - Composite: UP 0.3 percent at 2,772.20 (close) New York - Dow: UP 6.4 percent at 22,552.17 (close) Euro/dollar: DOWN at $1.1016 from $1.1031 at 2150 GMT Dollar/yen: DOWN at 108.61 yen from 109.44 yen Pound/dollar: UP at $1.2271 from $1.2204