European stock markets slide in early deals

European stocks slid in early deals on Friday, with EU leaders divided over the size of a financial rescue package to stimulate the bloc's economy left battered by the coronavirus pandemic.

Around an hour after opening, London was down 1.3 percent, Frankfurt dropped 1.6 percent, Paris retreated 1.5 percent, Milan lost 1.4 percent and Madrid tumbled 2.1 percent.

"The inability of the EU to come together quickly and agree, even in times of emergency, isn't just frustrating, it's harmful to all members," noted Craig Erlam, an analyst at Oanda trading group.

"They seem to have agreed on the idea of a recovery fund while leaving the details for a future date," he said.

The US on Friday approved nearly half a billion dollars in new stimulus but European leaders were divided on their own measures as the world sought to salvage economies hammered by the coronavirus pandemic.

Erlam added that "investors may also be reacting badly to Remdesivir's performance in its first randomised clinical trial".

US stocks ended flat on Thursday and Tokyo dropped on Friday, following reports that the closely watched antiviral drug Remdesivir has had no effect on patients in a coronavirus test.

"This was a ray of hope earlier this week and already we're learning the pitfalls of getting too excited about these cures at the early stages of testing," Erlam said.

Asian shares lower as Wall St rally fizzles amid virus fears

Asian shares are lower on Friday after an early rally on Wall Street suddenly vanished, the latest example of how fragile the hopes underpinning the stock market’s monthlong recovery are.

Japan's benchmark Nikkei 225 slipped 0.9 percent to finish at 19,262.00. South Korea's Kospi lost 1.3 percent to 1,889.01, while Australia's S&P/ASX 200 climbed 0.5 percent to 5,242.60. Hong Kong's Hang Seng fell 0.4 percent to 23,878.54, while the Shanghai Composite lost 1.1 percent to 2,808.53.

In India, the Sensex lost 0.6 percent to 31,704.37. Shares fell in Taiwan and Southeast Asia.

Investor sentiment was back in fragility mode as attention again shifted to the economic damage the world is likely to suffer because of the pandemic, says Prakash Sakpal and Nicholas Mapa, economists at ING.

“Investors will continue to be monitoring developments on the Covid-19 front with a setback on clinical testing for a treatment to the virus. Meanwhile, the US passed a fresh round of stimulus while oil prices continued to inch up slightly,” they said in a commentary.

On Wall Street, the S&P 500 flipped between gains and losses, ending the day down 0.1 percent. It’s a microcosm of the extreme swings that have gripped markets for months, as investors struggle to set prices for where corporate profits and the economy will be months from now.

The S&P 500 has skidded by a third from its record in February until a month ago, and since then has roughly halved its losses on a series of tenuous hopes – of businesses reopening, of government aid to temper the economic pain and of possible treatments for Covid-19.

A report from the Financial Times on Thursday afternoon undercut that third hope. It said a potential antiviral drug flopped in a Chinese clinical trial, citing documents published accidentally by the World Health Organization.

The study said the sample size was too small to draw scientifically valid conclusions and ended early. The Foster City, California-based company behind the drug, Gilead Sciences, said the data represented “inappropriate characterizations” of the China study.

Gilead's shares flipped from a 3.3 percent gain to a 4.3 percent loss after the report. It also helped topple the market.

The S&P 500 finished at 2,797.80, down 1.51 points. The Dow Jones Industrial Average rose 0.2 percent to 23,515.26 after losing almost all of a 409-point gain. The Nasdaq composite slipped 0.63 points to 8,494.75.

“It should be expected – even as we are optimistic, and we see signs of progress in treatment, testing and vaccines – that there’s going to be some forward and some backsliding,” said Nela Richardson, investment strategist at Edward Jones.

She said investors are still encouraged by signs of progress in some places that are seeing fewer new patients and deaths.

“The risk is that these fundamentals that we’re seeing now that are dastardly, just terrible and reflective of the economy really going into a sudden stop, last longer than what the markets currently anticipate,” she said. “That uncertainty will cause volatility, even if the overall trajectory in the market is positive.”

Preliminary data on manufacturing and services activity in Europe and the US came in even weaker than economists expected, as did a report on sales of new US homes. 

The headliner, though, was job losses. Another 4.4 million US workers filed for unemployment benefits last week, raising the total over the last five weeks to 26 million, or roughly one in six US workers.

Analysts said investors may have found some encouragement in a dip from the prior week's 5.2 million or were looking past the dismal data because they fully expected it.

”Numbers for the short term, when they’re reported, it’s almost like a sigh of relief that they aren’t higher,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

US benchmark crude rose 11 cents to $16.61 a barrel in electronic trading on the New York Mercantile Exchange. It rose 19.7 percent to settle at $16.50 a barrel. 

It has recovered after falling below $12 Monday, though it remains well below the roughly $60 level where it began the year. Brent crude, the international standard, rose 23 cents to $25.02 a barrel.

The dollar inched up to 107.69 Japanese yen from 107.50 yen Thursday. The euro inched down to $1.0745 from $1.0777.