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New trade talks revive European stocks as central bank decisions awaited

Published 09/13/2018, 05:22 AM
© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

By Helen Reid

LONDON (Reuters) - Europe's trade-sensitive autos and mining shares gained on news of fresh talks between the U.S. and China on Thursday, helping the market gain while investors traded hesitantly ahead of European Central Bank and Bank of England decisions.

The pan-European STOXX 600 (STOXX) rose 0.2 percent by 0722 GMT, while Germany's DAX (GDAXI) and the index of biggest euro zone stocks (STOXX50E) climbed 0.5 percent.

Autos shares (SXAP) rose 1.5 percent and mining shares (SXPP) climbed 0.7 percent after U.S. officials invited China to new trade talks, which the Chinese foreign ministry welcomed.

The two sectors have been the biggest victims of trade tensions between the United States and its trading partners.

"You have to be concerned about the impact [of trade tensions on autos] because the evidence is that companies are seeing pressures as a consequence," said Steven Magill, head of European Value at UBS Asset Management.

"But the share prices appear to be discounting a negative scenario already," added Magill, who holds Peugeot in his European portfolio.

Tech (SX8P) was also a top boost, up 0.9 percent as chipmakers and Apple (NASDAQ:AAPL) suppliers ams (S:AMS), Infineon (DE:IFXGn), BE Semiconductor (AS:BESI), and STMicro (MI:STM) climbed 2.3 to 3.5 percent after Apple launched bigger and pricier iPhones.

Dealmaking and results led to some strong stock moves.

French bank Natixis (PA:CNAT) gained 4.2 percent after it decided to sell several specialized finance businesses to its parent, BPCE, and use part of the 2.7 billion euros ($3.1 billion) in proceeds for acquisitions.

"No major acquisition expected, nothing imminent at the moment, but things could always develop by the time of the special dividend," wrote KBW analyst Jean Pierre Lambert.

Commerzbank (DE:CBKG) shares topped the DAX, rising 2.6 percent after UBS analysts upgraded the stock to a "buy".

News Deutsche Bank (DE:DBKGn) is considering an overhaul to loosen the bond between its retail and investment banks, making it easier to merge some or all of the group with rival lenders, could also be supporting the stock.

Recent reports have suggested mergers between the two German lenders, as well as possible deals involving Italian and French banks, but banks remain the worst-performing sector in Europe year-to-date.

"Despite all the recent rumours around UniCredit and other European banks, cross-border banking M&A will be limited, if any, in the foreseeable future," said Jauke de Jong, equity analyst at AFS Group in Amsterdam.

Oil storage and distribution firm Rubis (PA:RUBF) fell as much as 14 percent, recovering to trade down 6.4 percent by mid-morning, after issues with its Iran and Turkey operations bruised first-half profit.

U.S. sanctions against Iran forced Rubis to find a buyer for a recent acquisition in Iran, leading to a 15 million euro writeoff, while the firm's oil storage facility in Ceyhan, Turkey, also underperformed due to political tensions there, Berenberg analysts said.

German meal delivery firm Delivery Hero (DE:DHER) also suffered a 5.8 percent drop after its first-half results. [nL5N1VZ0PV]

French tyre maker Michelin (PA:MICP) rose 3.1 percent after it confirmed its 2018 financial outlook, saying signs of growth in Europe and North America would offset a slowdown in China.

Adyen (AS:ADYEN) shares fell 9.8 percent after the company placed 2.46 billion shares.

Investors were awaiting decisions from the ECB and the BoE, as well as a Central Bank of Turkey meeting, later in the session.

© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

Neither the ECB nor the BoE was expected to hike interest rates, but the market would hone in on any comments on the pace of the ECB's planned halving of its asset purchase programme, and from BoE policymakers on the Brexit process.

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