Trade war optimism lifts European shares

LONDON (Reuters) – European shares rose on Tuesday as optimism over the China-U.S. trade dispute helped them recover from the two-year lows hit in the previous session on a burst of political risk and worries over slowing global growth.

The pan-European STOXX 600 benchmark index rose 1.5 percent, while euro zone stocks .STOXXE added 1.3 percent and Germany’s DAX .GDAXI, the most sensitive to China due to its big exporters, rose 1.5 percent.

Sentiment was lifted by reports that Chinese and U.S. trade officials spoke by phone, a sign that discussions between the world’s top two economies continued even after the arrest of a top executive at Chinese tech giant Huawei.

Further cementing expectations that trade talks had not been interrupted was a report that China was preparing to cut its tariffs on U.S. car imports.

“That would tick off one of Trump’s post-G20 promises, while going someway to reassuring the markets that, despite the situation with Huawei’s (CFO) Meng Wanzhou, the nations are willing to adhere to what was agreed in Argentina,” said Connor Campbell, analyst at Spreadex.

China and the United States agreed this month to a ceasefire in their bitter trade war after high-stakes talks in Argentina between Presidents Donald Trump and Xi Jinping.

The export-oriented auto and tech sectors were among the biggest gainers, both up more than 2 percent, while materials stocks rose more than 3 percent as the trade hopes boosted metal prices. [MET/L]

France’s CAC 40 .FCHI was up 1.4 percent after French president Emmanuel Macron pledged late on Monday to raise the minimum wage and cut taxes in a bid to prevent more violent protests that have rocked the euro zone’s number two economy.

France’s Suez (SEVI.PA), however, fell 2.8 percent as a source said the board of French utility Engie (ENGIE.PA) decided to stick with its 32 percent stake in the utilities group.

In Italy, Banco BPM (BAMI.MI) rose 2.5 percent after announcing it had agreed to sell up to 7.8 billion euros in bad loans along with a stake in its debt recovery business to Credito Fondiario and U.S. fund Elliott.

WPP (WPP.L) rose 4.8 percent after the company said it would spend 300 million pounds and cut 2,500 jobs under a plan by new boss Mark Read to steer the world’s biggest advertising group back to growth.

Shares in Ashtead (AHT.L) jumped 3.6 percent as the equipment rental firm said it expected full-year results ahead of expectations.

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Apple helps Wall St. pull back after S&P hits eight-month low

(Reuters) – Wall Street fell for a fourth straight day on Monday, sending the S&P 500 to an eight-month low, with banks, energy and health stocks leading losses on mounting worries over global growth, the U.S.-China trade war and uncertainty over Brexit.

But the S&P and Dow Industrials, which have already lost all their gains for the year in a 4.5 percent slide last week, came off their session lows. The bounce came as Apple’s shares sharply cut their losses, which also helped the Nasdaq reverse course and post slight gains.

Markets have been dogged by signs of cooling global growth, concerns over interest rates and worries that escalating tensions between the United States and China could scuttle a fragile trade truce.

“You have political tensions with China, the potential for slowing global growth, and other geopolitical tensions, that continue to weigh on the markets,” said Charlie Ripley, senior investment strategist for Allianz Investment Management in Minneapolis.

Eight of the 11 major S&P sectors were lower. The biggest drag was a 1.85 percent drop in financials as U.S. Treasury yields dropped further on worries over U.S.-China trade conflict and the Brexit turmoil. [US/]

British Prime Minister Theresa May said she was delaying a planned vote in parliament on her Brexit deal as it was set to be rejected “by a significant margin”.

The rate-sensitive bank stocks tumbled 2.56 percent on worries that Brexit could hamper global growth, giving the Federal Reserve more reason to slow its pace of interest rate hikes.

“If the Fed is slowing, that means economic activity is below normal and that can negatively impact earnings,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Apple Inc was trading slightly higher, having erased its losses after Qualcomm Inc said it had won a preliminary order from a Chinese court banning the import and sale of several iPhone models in China due to patent violations.

Qualcomm rose 1.9 percent, and along with Apple and Microsoft Corp, helped push the technology index 0.51 percent higher.

At 1:23 p.m. ET, the Dow Jones Industrial Average was down 172.18 points, or 0.71 percent, at 24,216.77, the S&P 500 was down 14.22 points, or 0.54 percent, at 2,618.86 and the Nasdaq Composite was up 4.75 points, or 0.07 percent, at 6,974.00.

The small-cap Russell 2000, which is less sensitive than its larger peers to global worries such as trade, fell 0.61 percent and was 18.3 percent below its record closing high on Aug. 31.

The health index, which is the best performing S&P sector this year, fell 0.65 percent. Energy stocks retreated 2.38 percent, the most among the 11 S&P sectors as oil prices fell. [O/R]

Declining issues outnumbered advancers for a 3.12-to-1 ratio on the NYSE and a 1.92-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 90 new lows, while the Nasdaq recorded four new highs and 343 new lows.

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Dow, S&P dogged by growth worries; techs help Nasdaq bounce

(Reuters) – Wall Street dropped on Monday, led by Apple Inc, financials and healthcare stocks, falling further after its biggest slide since March last week on worries over global growth, the China-U.S. trade war and uncertainty over the Brexit deal.

The benchmark S&P 500 and the blue-chip Dow Jones Industrial Average, already in the red for the year after last week’s slide of more than 4.5 percent, fell another 0.5-0.6 percent, while the Nasdaq moved marginally higher.

Apple fell 1.7 percent after Qualcomm Inc said it had won a preliminary order from a Chinese court banning the import and sale of several iPhone models in China due to patent violations.

Ten of the 11 major S&P sectors were lower, led by a 1.4-percent drop in financials on expectations that the Federal Reserve would be less aggressive with monetary policy next year.

Energy stocks retreated 1.5 percent as oil prices fell, with the health care index also down about 1 percent.

“What you are looking at is drivers. Not a whole lot has changed from last week, but what has changed is the value of equities,” said Art Hogan, chief market strategist at B. Riley FBR in New York.

“We don’t have a whole lot of catalysts this week. That’s why we would pay more attention than not to news from the administration on trade and the Huawei CFO.”

Wall Street continues to be dogged by signs of cooling growth and worries that escalating tensions between the United States and China could scuttle their fragile trade truce.

Washington has set a March 1 “hard deadline” to successfully wrap up talks with Beijing over their trade spat, failing which a higher tariff rate will kick in, U.S. Trade Representative Robert Lighthizer said on Sunday.

That comes when investors are fretting that the arrest of a top Huawei Technologies Co Ltd [HWT.UL] executive at the behest of the United States could inflame tensions with China, though both the White House and Chinese state media have said the arrest and trade talks are separate events.

British Prime Minister Theresa May on Monday made an abrupt decision to pull a parliamentary vote, scheduled for Tuesday, on her Brexit deal.

At 10:14 a.m. ET, the Dow was down 149.20 points, or 0.61 percent, at 24,239.75, the S&P 500 was down 11.91 points, or 0.45 percent, at 2,621.17 and the Nasdaq Composite was up 10.97 points, or 0.16 percent, at 6,980.23.

Helping the Nasdaq, was a 0.3-percent gain in technology stocks, despite Apple’s drop. Qualcomm rose 3.3 percent, while Microsoft Corp and Intel Corp rose more than 1 percent.

Declining issues outnumbered advancers for a 2.35-to-1 ratio on the NYSE and a 1.55-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 72 new lows, while the Nasdaq recorded two new highs and 189 new lows.

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Investors ditch European stocks, BASF slides on profit warning

LONDON (Reuters) – Simmering U.S-Chinese trade tensions dented European shares on Monday as investors fled risk at the start of a highly uncertain week, with Britain’s parliamentary vote on Brexit also looming and chemicals stocks dented by a BASF profit warning.

The pan-European STOXX 600 index fell 0.9 percent to hit a fresh two-year low, with Britain’s FTSE 100 .FTSE down 0.4 percent and Germany’s DAX .GDAXI down 0.8 percent at around 0930 GMT.

Oil stocks .SXEP fell 1.1 percent, erasing their 2018 gains. Oil had been the last sector holding onto gains in Europe, and all the STOXX 600 sector indices are now in the red (with falls of 26 percent for autos and banks) or flat on the year.

Shaunak Mazumder, a senior fund manager at Legal & General Investment Management, said a combination of worries about the U.S.-China trade row and the Brexit vote was weighing on the market.

“The market is lacking proper conviction. If the U.S.-China issue blows over, that could give support to the market. But it’s difficult to call,” he added.

Shares in BASF (BASFn.DE) fell 4.7 percent after the German chemicals firm slashed its forecast for 2018 profits on Friday.

It said the decline was mainly due to its chemicals business, while low water levels on the Rhine and weak automotive demand especially in China were also to blame.

BASF peer Symrise (SY1G.DE) also tumbled 3.1 percent, Sika (SIKA.S) fell 5.1 percent and Imerys (IMTP.PA) lost 5 percent, helping to drag the pan-European chemicals index .SX4P down 2.5 percent and making it the worst-performing sector.

Construction and materials stocks .SXOP, also highly sensitive to economic growth, fell 1.5 percent, while autos stocks .SXAP declined 1.3 percent as trade tensions took their toll.

Unless U.S.-China trade talks wrap up successfully by March 1, new tariffs will be imposed, U.S. Trade Representative Robert Lighthizer said on Sunday, clarifying there is a “hard deadline”.

Chipmakers AMS (AMS.S), Siltronic (WAFGn.DE) and STMicro (STM.PA) fell 2.9 to 5.1 percent as investors ditched the tech sector.

Outside of trade, politics drove some of the biggest moves.

French retail, hotel, and transport stocks tumbled anew after a fourth weekend of “yellow vest” protests which are disrupting the economy.

LVMH (LVMH.PA) and Kering (PRTP.PA) were among the biggest drags on the STOXX. But France’s CAC 40 .FCHI overall did not underperform European peers, down just 0.6 percent.

Shares in British energy utilities Centrica (CNA.L) and SSE (SSE.L) fell around 3 percent as investors held their breath ahead of a crucial vote on Brexit on Tuesday.

Traders said a Sunday Telegraph report flagging a risk Centrica may struggle to pay its dividend was also hurting sentiment.

British housebuilders Berkeley Group (BKGH.L), Persimmon (PSN.L), Taylor Wimpey (TW.L) and Barratt Development (BDEV.L) fell 1.5 to 2.5 percent as nerves built and Peel Hunt cut its ratings.

Outside large-cap moves, shares in Interserve (IRV.L) plunged as much as 71 percent, last trading down 51 percent, after the embattled British outsourcer said it was in talks with debtholders and considering converting debt to equity.

(For a graphic on ‘All European sectors 2018 gains’ click tmsnrt.rs/2QL7Foh)

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European stocks tumble as investors shun risk, BASF hit by profit warning

LONDON (Reuters) – Simmering tensions between the U.S. and China dented European shares on Monday as investors fled risk at the start of a highly uncertain week with Britain’s parliamentary vote on Brexit looming.

The pan-European STOXX 600 index fell 0.8 percent to hit a two-year low once more by 0830 GMT, with Britain’s FTSE 100 .FTSE down 0.3 percent. Germany’s DAX .GDAXI, the most sensitive to China due to its big exporters, fell 0.9 percent.

Shares in BASF (BASFn.DE) fell 4.3 percent after the German chemicals firm slashed its forecast for 2018 profits on Friday.

It said the decline was mainly due to its chemicals segment while low water levels on the Rhine and weak automotive demand especially in China were also to blame.

BASF peer Symrise (SY1G.DE) also tumbled 3.6 percent, helping drag the pan-European chemicals sector .SX4P down 2.3 percent, the worst-performing.

Autos stocks .SXAP also fell 1.8 percent as trade tensions took their toll.

Chipmakers AMS (AMS.S), Siltronic (WAFGn.DE), STMicro (STM.PA) also fell 2.9 to 5.1 percent as investors ditched the tech sector.

Politics drove some of the biggest moves.

French retail, hotel, and transport stocks tumbled anew after a fourth weekend of “yellow vest” protests which are disrupting the economy.

British energy utilities Centrica (CNA.L) and SSE (SSE.L) both fell around 3 percent as investors held their breath ahead of a crucial vote on Brexit on Tuesday.

Housebuilders Berkeley Group (BKGH.L), Persimmon (PSN.L), Taylor Wimpey (TW.L) and Barratt Development (BDEV.L) fell 1.5 to 2.5 percent as nerves built and Peel Hunt cut its ratings.

Outside large-cap moves, shares in Interserve (IRV.L) plunged 71 percent after the embattled British outsourcer said it was in talks with its debt holders and considering converting debt to equity.

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European shares attempt to rebound after global sell-off

LONDON (Reuters) – European shares attempted on Friday to recoup losses sustained during the previous session’s global selloff but lacked thrust from Wall Street and Asian markets for a significant rebound.

By 0814 GMT, the euro zone’s STOXX .STOXXE index was up 0.9 percent after falling 3.2 percent during Thursday’s rout, which was triggered by fears the U.S. dispute with China could worsen to a full-out trade war.

Futures for U.S. indexes S&P 500 ESc1 were trading down 0.6 percent after ending the previous session slightly in negative territory but well above their session lows.

Traders were focused on incoming U.S. jobs data later in the session and whether it could shed any light on the health of the economy and the pace at which the Federal Reserve will raise interest rates.

Shares in German healthcare group Fresenius (FREG.DE) were the top losers in early trading, down 10.5 percent and set for their worst day since 2002.

Associated British Foods (ABF.L) shares fell 2.5 percent after reporting that trading at its Primark fashion chain was challenging in November.

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European shares fall as Huawei arrest fuels fresh trade worries; Ericsson up

MILAN (Reuters) – European shares fell sharply on Thursday after the arrest of a Huawei top executive fed worries over a fresh build-up in the Sino-U.S. trade war, hitting export-oriented tech and auto stocks.

Ericsson (ERICb.ST) and Nokia (NOKIA.PA) however outperformed, both trading up slightly in early deals, as the arrest the Chinese tech giant’s CFO piled up pressure on their biggest rival and 5G powerhouse.

By 0817 GMT, the pan-regional STOXX 600 index fell 1.2 percent, marching towards the lowest level since December 2016 it hit during the sell-off seen over the last two months.

The export oriented DAX .GDAX index, which has also a big exposure to China and has been hit recently by concerns over a slowdown in the world’s No.2 economy, fell 1.5 percent.

Auto stocks .SXAP were the biggest sectoral fallers, down 2.7 percent at their lowest in more than 2 years, led by a 3.4 percent drop in German carmaker Daimler (DAIGn.DE).

Tech .SX8P was also heavily sold off as declines in chipmakers offset gains in Ericsson. Huawei supplier STMicro .STMicro fell 4.2 percent.

Elsewhere, Diasorin (DIAS.MI) was the biggest faller on the STOXX 600, down 7 percent after Kepler Cheuvreux downgraded the Italian biotech company to hold from buy.

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European shares fall on doubts over U.S.-China trade truce

LONDON (Reuters) – European shares fell on Tuesday led lower by auto stocks as investors started to question whether the truce agreed by the United States and China on their trade dispute would lead to a long-term deal.

After enjoying a rally for its first day of trading in December, Germany’s DAX .GDAXI – the most sensitive to China and trade war fears – fell 1.1 percent, while the broader pan-European STOXX 600 index declined 0.8 percent.

“The number one driver for global risk sentiment is the U.S.-China trade talks, which suddenly don’t look as promising as they did over the weekend,” Commerzbank rates strategist Christoph Rieger wrote.

The European automotive sector .SXAP, which is most sensitive to trade war fears, was the biggest sectoral faller, down 1.7 percent. Shares in German carmakers Volkswagen (VOWG.DE), Daimler (DAIGn.DE) and BMW (BMWG.DE) fell between 1.6 and 3 percent.

The tech sector .SX8P was also a big loser, down 1.4 percent. Chipmakers, which are also heavily exposed to China and trade, sustained heavy losses with AMS (AMS.S) down 5.1 percent, Siltronic (WAFGn.DE) down 8.1 percent.

Adding to the weak sentiment, the yield curve between U.S. three-year and five-year notes and between two-year and five-year inverted on Monday, a first since the financial crisis, excluding very short-dated debt.

Analysts now fear an inversion of the two-year, 10-year yield curve could be imminent and point towards a possible U.S. recession.

“Recessionary fear is starting to raise its ugly head,” wrote Stephen Innes at broker Oanda.

Top faller on the STOXX 600 was IG Group (IGG.L), down 9.7 percent, after the British online trading platform forecast a drop in first half 2019 revenues as it suffered from newly-introduced limits on ordinary individuals making highly-leveraged financial bets.

French catering group Elior (ELIOR.PA) sank 8.6 percent after cutting its sales growth outlook, and Belgian postal services firm Bpost (BPOST.BR) plunged 22.8 percent after a profit warning.

France’s JCDecaux (JCDX.PA) fell 2.9 percent after Exane BNP Paribas reinitiated its coverage of the stock with an “underperform” rating.

Energy stocks .SXEP gave up earlier gains as crude prices came off highs on worries that demand would stall due to a Sino-U.S. trade war, and that Russia remained a stumbling block to a deal to cut global crude supply.

BP (BP.L) however rose 0.9 percent and Royal Dutch Shell (RDSa.AS) ended flat.

German industrial gases group Linde (LINI.DE) will replace British bank Barclays (BARC.L) on the leading index of pan-European stocks STOXX Europe 50 .STOXX50, STOXX Ltd, the operator of Deutsche Boerse Group’s index business, said.

The change comes as part of the quarterly reshuffle and will be effective at the opening of European trading on Dec. 24, STOXX said on Monday. Linde shares rose 2.1 percent and Barclays was down 2.6 percent.

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Growth and trade nerves grind European shares down to 2-week low

LONDON (Reuters) – Worries about U.S. bond markets signaling an impending recession, and a still rumbling trade war between the world’s top two economies, saw European shares sink further on Wednesday after a 3 percent drop on Wall Street the previous day.

The pan-European STOXX 600 ended down 1.2 percent at its lowest level since Nov. 23. The euro zone .STOXXE stock index and Germany’s DAX .GDAXI also fell 1.2 percent. U.S. stock markets were shut on Wednesday for a day of mourning in honor of former president George H.W. Bush who died last week.

Cyclical sectors like construction .SXOP and miners .SXPP posted the biggest falls, down 2.2 and 1.8 percent respectively, as investors dumped stocks highly sensitive to economic growth.

“Cyclicals are really dependent upon accelerations in growth, they’re very real economy sensitive for higher revenues,” said John Ricciardi, CEO and lead portfolio manager at Kestrel Investment Partners.

The inversion of parts of the U.S. yield curve means investors are beginning to panic about future growth and inflation, Ricciardi added.

Analysts cut their estimates for 2019 earnings growth as markets turned sour this autumn.

Banks .SX7P also fell, down 0.7 percent, but losses were limited by a bounce in Italian lenders .FTIT8300 as Italian government bond yields continued to fall sharply on hopes that Rome could cut its budget spending plans.

Tech stocks .SX8P fell 1.8 percent after the highly valued U.S. tech sector sold off.

Chipmakers AMS (AMS.S), STMicroelectronics (STM.MI) and Infineon (IFXGn.DE) fell 2.3 percent to 6.1 percent following a sharp drop in chip stocks on Wall Street overnight.

German carmakers slightly outperformed the DAX as investors digested what seemed a relatively positive outcome from a meeting of auto executives at the White House.

U.S. President Donald Trump pressed carmakers to increase investments in the United States, something the executives said they planned to do but wouldn’t be able to if the administration went ahead with threatened tariffs.

White House economic adviser Larry Kudlow, among those in the meeting, said he did not think that car tariffs were imminent.

Daimler (DAIGn.DE) and BMW (BMWG.DE) and Volkswagen (VOWG_p.DE) all fell less than 0.9 percent.

Shares in valve manufacturers Rotork (ROR.L) and Weir (WEIR.L), which supply the oil industry, tumbled after U.S. energy services firm Schlumberger (SLB.N) warned on Tuesday, that a drop in fracking activity would hit its North America revenues.

Swedish pharma firm Elekta (EKTAb.ST) was a rare gainer, up 3.5 percent after it won Food & Drug Administration clearance for its “Unity” radiation therapy, clearing it for commercial sales and clinical use in the United States.

M&A news was also a driver.

Shares in Shire (SHP.L) jumped 3 percent after shareholders of Japan’s Takeda approved the takeover of the London-listed pharmaceutical firm.

Among small-caps, Swedish retailer Clas Ohlson (CLASb.ST) provided the latest example of the squeeze on the sector to close physical stores as shoppers switch to online purchases.

Its shares opened down 5 percent but swung back to end up 6.4 percent as investors welcomed its new strategy including closures of loss-making stores in Britain and Germany.

Broker notes hit some stocks. Hargreaves Lansdown (HRGV.L) fell 4.4 percent after Morgan Stanley cut its rating to underweight.

Saint Gobain (SGOB.PA) shares fell 3 percent, the worst performer on the CAC 40, after JP Morgan cut it to “neutral” from “overweight”.

Altran (ALTT.PA) shares fell 8 percent after the company announced its North America chairman Frank Kern will retire.

Graphic: Global earnings growth expectations – tmsnrt.rs/2RvgzDw

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Futures fall as trading resumes; trade, growth worries linger

NEW YORK (Reuters) – U.S. stock index futures fell late on Wednesday, following the previous session’s dramatic sell-off and lingering worries over trade and economic growth.

S&P 500 e-mini futures EScv1 were last down 0.7 percent, with volume at 66,034 contracts.

The losses in the first few minutes of trading might have been even steeper, but CME Group’s Chicago Mercantile Exchange implemented a series of 10-second trading halts that helped limit the initial drop.

Investors were wary of hot-button issues that could create volatility in the coming days and weeks, including Thursday’s meeting of the Organization of the Petroleum Exporting Countries, Britain’s Dec. 11 parliamentary vote on a Brexit plan, and a 90-day deadline for a U.S.-China trade agreement.

“Tomorrow is certainly going to be about testing that close” from Tuesday, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis. “I suspect we’re going to go lower tomorrow at some point during the day.”

U.S. stocks had tumbled more than 3 percent on Tuesday as the U.S. bond market sent unsettling signs about economic growth and investors worried anew about global trade. U.S. equity and bond markets were closed Wednesday, a day of mourning for former President George H.W. Bush, 94, who died on Friday.

Skepticism about prospects for a trade deal was a key reason behind Tuesday’s decline. But China expressed confidence on Wednesday it could reach a deal, a sentiment echoed by U.S. President Donald Trump a day after he warned of more tariffs if the two sides could not agree.

“You saw the U.S. equity markets catch up to what the bond markets already knew earlier this week – there really is no done deal when it comes to trade and tariffs,” said David Lafferty, senior vice president and chief market strategist at Natixis Investment Managers. “I think U.S. investors are now going to ask themselves, Will the market again fall for the head fakes?”

Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, and other investors said Tuesday’s sell-off could lead to some bargain hunting on Thursday, but he said uncertainty over trade and other issues will heavily influence sentiment in the near term.

Investors were also anxiously awaiting Friday’s jobs report.

“We’ve got a very narrow path for the bull,” Paulsen said. “People aren’t talking about it, but in some sense the primary problem is stagflation. It’s a problem that you’ve got people worried about too hot and too cold at the same time.”

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