* China cuts 5-year loan prime rate by 15 bps
* STOXX ends week lower, erases big declines from earlier
* Richemont cautious on China growth
* Other luxury stocks slide
May 20 (Reuters) - European shares rose on Friday, with a
boost from defensive sectors after hopes of an economic recovery
in major trading partner China were bolstered by more central
bank stimulus, though they still ended the week in the red.
China's central bank cut its five-year loan prime rate by a
larger-than-expected 15 basis points (bps), boosting global
market sentiment even as COVID-19 cases in Shanghai climbed
Travel and tourism stocks, financial services
, healthcare and utilities led gains in
Europe, rising between 1.5% and 2.0%, lifting the pan-European
STOXX 600 index 0.7%.
Over the week, though, the main index was down 0.5%.
"It is not surprising perhaps that we have a little bit of a
bounce today given the good news from China overnight and as we
have had some very negative days this week," said Jonathan Bell,
chief investment officer at Stanhope Capital.
Global stock markets saw another volatile week as recession
fears gripped investors after weak Chinese retail sales data and
dismal results from big U.S. retailers highlighted the impact
from surging inflation.
Over the week, European retail and food and beverage
stocks lost 2.2% and about 5%, respectively, while
miners outperformed, rising 4.4%.
Data on Friday showed British retail sales jumped
unexpectedly in April, but the outlook for consumer spending
remained resolutely downbeat.
Separate data showed a record rise in German producer prices
last month, as the Ukraine war pushed up energy costs.
Euro zone money markets ramped up their bets on a 50-bp
interest rate hike from the European Central Bank in July that
would bring the bank's policy rate to 0%.
"We think these price pressures will continue to build in
the coming months," said Andrew Kenningham, chief Europe
economist at Capital Economics.
"That in turn informs our view that the ECB will want to
move rapidly to tighten policy. We are forecasting a 25 bp rate
hike in July, but as we argue here, there is a growing chance
that the ECB kicks off with a 50 bp hike."
Luxury stocks took a hit as Richemont slumped 13.1%,
after the company struck a cautious note over growth in China
after its full-year profit disappointed.
The company also failed to report any meaningful progress in
long-running talks about its "Luxury New Retail" partnership.
Other luxury brands such as Louis Vuitton owner LVMH
, Christian Dior and Hugo Boss
lost between 1.3% and 2.2%.
(Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru
Editing by Arun Koyyur and Mark Potter)