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European stocks struggle with retail stocks and banks in focus; DAX flat

Published 01/10/2017, 05:22 AM
Updated 01/10/2017, 05:22 AM
© Reuters.  European stocks mostly lower, though German and British shares struggle for gains

© Reuters. European stocks mostly lower, though German and British shares struggle for gains

Investing.com – European stocks were trading mostly lower on Tuesday, while investors chewed over news from the retail sector and kept their eye on developments with Italian banks.

Nearing midday in Europe, the benchmark Euro Stoxx 50 lost 0.15%, France’s CAC 40 fell 0.13%, although Germany’s DAX 30 edged slightly higher, up 0.01%.

On a light calendar day for economic reports, French industrial output rose 2.2% month-on-month in November, beating a forecast for a gain of 0.6%.

Earlier, China registered its largest increase in producer prices since September 2011, in what could be a sign of stabilization in the world’s second largest economy on the same day that the director of the National Development and Reform Commission (NDRC) Xu Shaoshi said that the Chinese economy was expected to have grown 6.7% in 2016.

China also saw annualized inflation ease in December to 2.1%, coming in below expectations for it to hold at 2.3%.

On the European company front, all eyes were in movements in the retail sector.

Over in the U.K., WM Morrison (LON:MRW), Britain's fourth largest supermarket chain, increased its profit forecast on Tuesday after registering its strongest Christmas sales in seven years, while the U.K.’s largest chain Tesco (LON:TSCO) managed to beat out competitors during the holiday season, according to a report from market researcher Kantar Worldpanel.

Both retailers were near the top of the Euro Stoxx 600 with gains of more than 3%.

In the euro zone’s largest economy, shares in German retailer Metro AG (DE:MEOG) slumped nearly 2% after reporting sluggish sales in its fiscal first quarter.

In M&A, French cosmetics dealer L’Oreal (PA:OREP) announced it would buy three skincare brands from Valeant Pharmaceuticals (TO:VRX) for $1.3 billion.

Leading the Euro Stoxx 600 lower, shares in Just Eat (LON:JE) tumbled 8% as the online food delivery firm saw order growth continued its downward trend.

European banks were also under downward pressure as concern about Italian banks continued to dampen sentiment. Popolare di Vicenza and Veneto Banca which were rescued last year were to propose a deal with shareholders that could cost them €600 million ($634 million), according to a Reuters’ report.

Meanwhile, oil prices edged higher on Tuesday, after suffering their biggest one-day loss in six weeks in the prior session amid doubts over the implementation of a planned deal by global crude producers to scale back output.

Energy stocks were trading higher, as French oil and gas major Total SA (PA:TOTF) advanced 0.29% , Italy’s ENI (MI:ENI) gained 0.78%, while Norwegian rival Statoil (OL:STL) rose 0.25%.

Financial stocks were mostly lower, as French lenders BNP Paribas (PA:BNPP) traded down 0.36% though Societe Generale (PA:SOGN) gained 0.45%, while Germany’s Deutsche Bank (DE:DBKGn) and Commerzbank (DE:CBKG) slumped 2.65% and 2.88%, respectively.

Among peripheral lenders, Italy’s Intesa Sanpaolo (MI:ISP) was off 1.13% and Unicredit (MI:CRDI) sank 2.99%, while Spanish banks BBVA (MC:BBVA) fell 2.43% and Banco Santander (MC:SAN) retreated 0.37%.

In London, the commodity-heavy FTSE 100 once again broke the general trend in Europe, inching up 0.06% as sterling continued to show weakness. A cheap pound drives up the value of multinational firms listed on the index, as it means their overseas earnings are worth more when converted into the British currency.

Shares in Glencore (LON:GLEN) rose 1.10%, Anglo American (LON:AAL) soared 4.76%, while BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) jumped 2.39% and 3.32%, respectively.

Energy stocks were mixed, as BP (LON:BP) lost 0.76% but rival Royal Dutch Shell (LON:RDSa) advanced 0.13%.

Financial stocks were also lower as shares in HSBC Holdings (LON:HSBA) slipped 0.01% and the Royal Bank of Scotland (LON:RBS) slumped 2.15%, while Barclays (LON:BARC) and Lloyds Banking (LON:LLOY) fell 1.15% and 0.46%, respectively.

In the U.S., equity markets pointed to a flat open. The Dow Jones Industrial Average futures was unchanged, S&P 500 futures dropped 0.02%, while the Nasdaq 100 futures inched up 0.01%.

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