LONDON (Reuters) - European shares sank on Friday as the euro strengthened company earnings disappointed at the end of a turbulent week.
The euro climbed to a two-year high on Friday, sending the exporter-heavy STOXX 600 <.stoxx> down 1 percent to a weekly decline of 1.7 percent. Euro zone stocks <.stoxxe> fell 1.3 percent while blue chips sank 1.4 percent.The weekly loss came after the STOXX 600 had its strongest week in more than two months, indicating a sharp turnaround in sentiment. "While earnings seasons over the past year have typically started strong before turning worse, the current season is off to a decidedly weak start", Deutsche Bank's equity strategist Wolf von Rotberg, said."FX strength is set to weigh on euro earners’ results, which will likely contribute to subdued beat ratios for the remainder of the season", he said. However, money kept flowing into European equities, with the largest inflows to the region in 10 weeks, some $3 billion. Investors pointed to inflows as mitigating muted second-quarter earnings growth. "Since the start of 2016, $60 billion left European equities, and $20 billion has flowed back in. So there's still that remaining $40 billion which hasn't yet come back in, which provides the technical support for our positive view," said Nandini Ramakrishnan, global market strategist at JP Morgan Asset Management. She added she saw second-quarter earnings growth for the STOXX 600 in the high single digits and hitting 14 percent for the full year. France's blue-chip CAC 40 <.fchi> fell to its lowest since April 21, just before Emmanuel Macron's first-round victory sent French and European equities surging. Germany's DAX <.gdaxi> fell 1.7 percent, its worst daily performance in a month and its lowest since April as well. Deutsche Bank strategists have an underweight on the French and German markets because of their heavy cyclicals weighting, which they think could hurt them as momentum in PMI indicators fades. They are favorable on the more defensive Swiss and UK indexes. Infineon