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* European banks jump after Powell speech
* Technology stocks among biggest sectoral decliners
* Norwegian Air tumbles after H1 loss
(Updates to close)
By Sruthi Shankar
Aug 28 (Reuters) - European stocks slipped on Friday as
investors dumped this year's outperformers including technology
and healthcare stocks and bid up banking shares after the U.S.
Federal Reserve unveiled its new policy framework.
The pan-European STOXX 600 index .STOXX slipped 0.5%, but
still ended the week about 1% higher after signs of progress in
COVID-19 treatments and vaccines spurred optimism earlier in the
week.
Technology stocks .SX8P , which have surged about 11% this
year, were down 0.8%, and the healthcare index .SXDP fell
1.1%.
Fed Chairman Jerome Powell announced a new policy framework
on Thursday, which focuses more on boosting U.S. economic growth
and less on worries that inflation could be running too high.
"If the Fed's policies succeed in reflating the economy,
interest rates are unlikely to fall much further and value
stocks such as financials should begin to outperform growth
stocks" analysts at BCA Research said.
Interest rate-sensitive banks .SX7P , which have so far
lagged the broader markets, jumped nearly 1.7% and were among
the best sectoral performers this week.
Shares in BNP Paribas BNPP.PA , HSBC HSBA.L and Banco
Santander SAN.MC rose between 0.6% and 3.6%, providing the
biggest boost to the STOXX 600.
Still, with coronavirus cases picking up again in Europe,
investors fear that could impede an economic rebound from a
crash in the second-quarter, though optimism around the
development of a COVID-19 treatment has helped calm some
jitters.
"We think an interrupted V-shaped recovery seems to be the
way we're heading," said Francis Ellison, client portfolio
manager of European equities at Columbia Threadneedle
Investments.
"That means that we're seeing a sharp recovery, but nowhere
back to 2019 levels, and that will take a year or two to reach."
Data on Friday showed German consumer morale worsened
heading into September, casting some doubt on whether household
spending in Europe's largest economy is powerful enough to spur
a recovery. Norwegian Air NORR.OL tumbled 9.5% after the budget
carrier said it still needed more cash to weather the COVID-19
pandemic as it reported a deep loss for the first half of 2020.
Italian state-owned bank Monte Dei Paschi di Siena BMPS.MI
gained 2.7% as it received a conditional green light from the
European Central Bank for its bad loan clean-up plan.
Shares in German drugs company Bayer AG BAYGn.DE fell
2.7%. It said there were "bumps" in sealing its $11 billion
settlement of U.S. lawsuits over its Roundup weed killer after a
U.S. judge cast doubt on the progress of the agreement.