Once again, European banks tried hard in the latest earnings season, but ultimately failed to boost sentiment, Bloomberg News reported. Expectations were low and hence several lenders were able to post a beat, yet many banks warned of a challenging outlook as yields in Europe hit all-time lows. Citigroup notes that seven out of nine regional markets under their coverage were able to surpass estimates, with the strongest positive surprises from Spanish and Swiss lenders.

European insurers are snapping up more emerging-market debt, spurred on by worries that negative-yielding bonds in Europe might not offer enough returns to meet their future payments, the International New York Times reported on a Reuters story. The move represents a shift for investors, who have usually filled much of their portfolios with high-grade bonds issued by developed-market governments and companies. An estimated 250 billion euros, or around 5% of European insurers' assets, are invested in fixed income, up from 2% to 3% five years ago, said people at several insurers.

Household income, spending and wealth rose at the start of the year, bolstered by a strong labour market, according to the latest data, but Brexit uncertainties left consumers gloomy about the future direction of the economy, the Financial Times reported.

Thomas Cook, the UK tour operator, lost nearly a fifth of its market value after it confirmed it was seeking a further £150m on top of the £750m already secured as part of a rescue deal with its debtholders, the Financial Times reported. The Financial Times revealed on Friday that Thomas Cook was in talks with bondholders to secure the additional capital, as part of a bailout involving its largest shareholder, the Chinese conglomerate Fosun, and its lending banks.

The British economy shrank in the second quarter for the first time in almost seven years as stockpiling activity slowed and Brexit uncertainty intensified against a backdrop of weaker global growth, the Financial Times reported. Output fell 0.2 per cent in the three months to June, worse than the flat performance expected by economists and down from a 0.5 per cent expansion in the first quarter, according to data from the Office for National Statistics released on Friday.

Industrial production in France fell sharply in June, undermining hopes that the eurozone’s manufacturing sector might have seen the worst of this year’s slowdown, the Financial Times reported. Industrial production dropped by 2.3 per cent month-on-month according to French statistical body Insee. Manufacturing, the largest component of industrial output, fell 2.2 per cent in June from the previous month, and was down 0.3 per cent in the second quarter compared to the first, driven largely by a marked drop in the making of transport equipment.

A fresh bout of political instability in Italy is testing investors’ faith in a bond rally that has sent Rome’s borrowing costs tumbling this year, but bondholders are reluctant to head for the exit. Italian debt came under pressure on Friday after the far-right League tabled a vote of no confidence in Prime Minister Giuseppe Conte, as party leader Matteo Salvini pulled the plug on Italy’s governing coalition, the Financial Times reported. The 10-year Italian bond yield rose by 0.23 percentage points to 1.76 per cent, extending the previous day’s rise.

Boris Johnson arrived in Downing Street last month intent on putting “rocket boosters” under the economy, the Financial Times reported. But after the dismal growth figures released on Friday, the prime minister may count himself lucky if the UK manages to avoid falling into a recession by October 31, when he insists the UK will leave the EU.

Investment banks and hedge funds are betting on the downfall of UK shopping centres, turning their attention to corporate bonds issued by one of the country’s largest retail landlords, the Financial Times reported. Bricks-and-mortar retailing in the UK is in crisis because of higher costs and consumers moving purchases online — trends that have forced a series of big retailers to enter insolvency arrangements, shutting thousands of stores.

Tata Steel’s UK division sank deeper into the red over the past financial year, as output fell at the country’s largest producer because of repair work on a furnace. The manufacturer registered a 1 per cent increase in annual sales to £2.41bn in the period ended 31 March because of higher global steel prices, according to its annual report, the Financial Times reported. But its operating loss before one-off items widened to £157m, from £48m last year, because of lower liquid steel production and sales volumes, the company said.