European shares settle lower as investors gauge mixed earnings, EU-US trade progress
By Sanchayaita Roy, Twesha Dikshit and Ragini Mathur
July 25 (Reuters) - European shares closed lower on Friday, as investors assessed mixed corporate earnings while awaiting updates on a framework of an EU-U.S. trade deal that officials said could be reached as early as this weekend.
Investors navigated the peaks and troughs around a potential agreement between the two large economies after a busy week of trade discussions with the U.S. culminated in deals with Japan, Indonesia, and the Philippines.
The pan-European STOXX 600 index .STOXX dropped 0.6% to session lows after U.S. President Donald Trump said there was less chance of an agreement with the EU, but pared losses after EU diplomats reiterated that a deal of 15% duties on European goods was still in the works.
The index last closed 0.2% lower with most regional bourses in red, but on a weekly basis, the STOXX index was on track for modest gains.
"It's hard to spin it as a good deal, but it would at least avoid much higher U.S. tariffs and retaliation from the EU," said Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics.
"The reported deal with the U.S. would take a major downside risk off the table for now, weakening the case for further interest rate cuts."
Meanwhile, corporate earnings were in full swing.
Puma PUMG.DE was the biggest percentage loser on the benchmark index, falling 16%, its largest daily drop in more than four months. The sportswear brand cut its full-year outlook and reported weaker-than-expected quarterly results.
London-listed sports retailer JD Sports JD.L slipped 0.7% after Puma's results.
On the flip side, LVMH LVMH.PA gained 3.9% after the French luxury group reported quarterly results, with analysts pointing to hopes on the horizon as the group said it saw signs of recovery in the Chinese market.
The broader luxury index .STXLUXP rose 1.8% and was the top sectoral performer.
Automobile stocks .SXAP gained 1.4%, boosted by Volkswagen's VOWG.DE 4.6% rise after the CEO of Europe's biggest carmaker said cost cuts must be accelerated in response to tariffs. Earlier in the session, shares took a hit on the company's slashed full-year sales and profit margin forecasts.
Still, Traton 8TRA.DE, a truck unit of German automaker Volkswagen, fell 4.1%.
Carrefour CARR.PA gained 5.5% after Europe's biggest food retailer reported its half-year results.
Attention next week will turn to key events, including policy decisions from the Federal Reserve, earnings from several "Magnificent Seven" companies, and Trump's August 1 tariff deadline.
