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UPDATE 1-Recovery in European stocks loses steam, Renault tanks on CEO reports


Reuters
Updated: 19-11-2018 16:02 IST
European shares inched higher on Monday as signs of an easing in U.S.-China trade tensions boosted mining and technology stocks, while carmaker Renault sank on media reports its CEO would be arrested on suspicion of under-reporting his salary.

Miners helped support the market, with the basic resources sector up 0.3 percent and construction & materials up 0.4 percent.

London copper edged up after U.S. President Donald Trump said he may not impose more tariffs on Chinese goods, but gains were capped amid tensions between the two major economies at a regional AEPC summit.

The pan-European STOXX 600 opened up 0.6 percent but flagged rapidly to trade just 0.2 percent higher by 1000 GMT, after three straight down days. The current bear market has made it increasingly hard for indexes to hold on to early gains.

Germany's DAX fell into the red and France's CAC 40 wilted to trade flat as Renault shares dented the index.

With the earnings season petering out, management issues, broker notes and M&A were the main drivers of the market.

Renault shares sank as much as 15 percent, the biggest STOXX 600 fallers, as Japan's Asahi newspaper reported Nissan chairman Carlos Ghosn, who doubles as Renault's chairman and chief executive, is to be arrested on suspicion of under-reporting his salary.

Spokesmen for Renault and the Renault-Nissan-Mitsubishi Motors alliance did not immediately return calls and messages seeking comment.

The French carmaker's shares were set for their worst day since the Brexit vote, and hit their lowest level since Oct 28 2014, more than four years ago.

About $2 billion was wiped off the company's market capitalisation and roughly 3.5 times the average daily volume had been traded by 1028 GMT.

The autos sector fell 0.4 percent as Renault single-handedly pushed the index into the red.

Italy's FTSE MIB led gains, up 0.8 percent with its banking stocks index up 1.5 percent as Italy's government bond yields fell.

Telecom Italia shares climbed 3.5 percent after Italy's biggest telecoms company appointed Luigi Gubitosi as its new CEO.

Chipmaker stocks AMS, STMicro and Siltronic , which are highly sensitive to trade war news, were among top gainers, up 4.1 to 6.3 percent.

The gains were helping the sector claw back some of the ground lost last week after a series of profit warnings ahead of the crucial holiday season.

Novo Nordisk shares climbed 2.5 percent after JP Morgan upgraded the pharmaceuticals company to "overweight".

Salvatore Ferragamo shares fell 3.3 percent, bottom of Italy's FTSE MIB index, after Bank of America Merrill Lynch analysts cut the luxury stock to "underperform" after a four-day luxury goods field trip to China.

Swatch shares also lost 3.9 percent after BAML slashed its price target on the stock by 27 percent, saying watch retailers they met confirmed a significant slowdown in recent months.

The FTSE 100 managed a 0.3 percent gainas traders and investors said the lack of fresh bad news on Prime Minister May's draft Brexit deal drove relief.

Overall Europe's earnings season has failed to impress investors, and analysts have continued to cut their earnings estimates for the STOXX 600 at the fastest pace since the Brexit vote selloff of June 2016.

"The current economic cycle has been particularly weak and has generated very little revenue growth," wrote Goldman Sachs analysts.

"Net income margins have reached their pre-crisis level and we expect them to peak this year," they added.

(Reporting by Helen Reid; editing by Josephine Mason and Andrew heavens)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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