UPDATE 2-Euro zone shares edge higher on rally in Airbus, luxury stocks


Reuters | Brussels | Updated: 03-10-2019 22:51 IST | Created: 03-10-2019 22:50 IST
UPDATE 2-Euro zone shares edge higher on rally in Airbus, luxury stocks
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Euro zone shares made small gains on Thursday after their worst sell-off in two months a day earlier, as a rebound in Airbus and spirits makers outweighed the latest round of weak economic data from the euro zone and the United States. The blue-chip and wider STOXX 600 pan-European indexes sank almost 3% on Wednesday after the World Trade Organization approved 10% U.S. tariffs on European-made Airbus planes and 25% duties on goods ranging from French wine to Scotch whisky.

After the initial shock of the decision, intended by the Trump administration as punishment for illegal EU aircraft subsidies, traders judged the detailed list of products affected showed the actual economic impact should be minimal. The tariffs were not a game-changer for Europe, said Wouter Sturkenboom, chief investment strategist EMEA & APAC at Northern Trust Asset Management. "However if Trump decides to go after the auto sector, we'd take that to heart."

Airbus, luxury stocks like Louis Vuitton-owner LVMH , and spirits makers Remy Cointreau and Pernod gained between 0.8% and 6.4% as a list showed that Washington had exempted some products from tariffs. A prolonged tit-for-tat trade war between Washington and Beijing and a worsening outlook for the quarterly earnings season that is just getting underway have soured investor sentiment towards Europe after a bullish September.

Data on Thursday showed a bigger-than-expected fall in euro zone producer prices and stalling business activity. On the other side of the Atlantic, ISM data showed that U.S. services sector activity slowed in September to a three-year low. "(The data) suggests that any pretension by the central banks, particularly the U.S. Federal Reserve, to be in a wait-and-see phase will simply drop," said Ken Odeluga, a market analyst at City Index

The euro zone index closed 0.1% higher, while the broader pan-region index closed down 0.02%. London's FTSE dropped 0.6% to close at its lowest since late August, having hit a seven month low earlier in the session. Markets in Frankfurt were closed on Thursday for a local holiday.

Oil stocks were the biggest drags on the pan-region index, and some ex-dividend stocks also weighed. H&M shares, however, jumped 4% after the world's second-biggest fashion retailer reported its first quarterly rise in pretax profit in over two years. 

Also Read: GLOBAL MARKETS-Stocks sink on dismal euro zone data, dollar gains

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

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