By Sruthi Shankar and Sagarika Jaisinghani
(Reuters) - European stocks broke a four-day winning streak on Thursday as ex-dividend trading and a stronger pound hit the UK's blue-chip companies, while investors sold off banks and energy stocks that have outperformed this week.
The pan-European STOXX 600 <.STOXX> closed 0.6% lower, with London's FTSE 100 <.FTSE> sliding 1.5% as a jump in the pound hurt exporters on the index, while heavyweights like AstraZeneca
Reversing a recent trend, investors favoured pockets of markets that have remained resilient in the wake of the coronavirus crisis such as the technology sector. On Wall Street, Apple
That left some of the cyclical sectors that are more exposed to an economic downturn, such as banks <.SX7P>, oil & gas <.SXEP>, miners <.SXPP> and automakers <.SXAP>, falling between 0.8% and 1.9%.
Geir Lode, head of global equities international at Federated Hermes, noted that it is difficult to gauge whether a rally in these cheaper stocks will be sustained.
"It reflects the uncertainty that still pervades the world as we continue to negotiate our way back to normality as well as increasing U.S.-China tensions," Lode wrote in a note.
After a U.S. move to ban two popular Chinese apps last week, investors were nervous about upcoming talks between Beijing and Washington officials over a trade deal agreed earlier this year.
Meanwhile, U.S. Democrats and Republicans remain deadlocked after weeks of wrangling over a fifth coronavirus aid bill to support a struggling economy.
Trillions of dollars in stimulus and a stellar rally in technology stocks have helped the U.S. S&P 500 index <.SPX> reach striking distance of a record high. The European blue-chip index <.STOXX50> is still about 15% below its February peak, but the pace of recovery for both from a market crash in March has been similar.
Weak earnings also dented the mood, with struggling conglomerate Thyssenkrupp
Danish brewer Carlsberg
Graphic: S&P 500 lags STOXX 50 in euro terms from mid-March lows https://fingfx.thomsonreuters.com/gfx/mkt/jbyprkyamve/Pasted%20image%201597328775504.png
(Reporting by Sruthi Shankar in Bengaluru; Additional reporting by Sagarika Jaisinghani; Editing by Arun Koyyur, Bernard Orr and Giles Elgood)