Europe cuts losses as travel shares rebound

(Reuters) – European shares pared early losses on Tuesday as travel stocks rebounded, but rising U.S.-China tensions and underwhelming earnings report from mining group BHP weighed on sentiment.

The pan-European STOXX 600 index edged up 0.1%, with travel and leisure stocks .SXTP gaining 0.9% after suffering sharp losses earlier this week as many European countries imposed curbs amid a pick-up in coronavirus cases.

Other defensive sectors that are considered more stable in times of economic uncertainty such as real estate .SX86P, telecoms .SXkP and utilities .SXKP rose more than 0.4%.

The global mood remained cautious after the Trump administration’s plan to tighten curbs on China’s Huawei Technologies Co [HWT.UL] ratcheted up tensions with Beijing. That followed record gains for Wall Street’s technology stocks overnight as investors bought into a stellar run this year that has taken the S&P 500 .SPX near all-time highs.

“What we’re seeing is some consolidation in European markets given that in the past two months, we’re more or less trading sideways as opposed to the U.S. where growth stocks have been lifting the overall market,” said Matthias Bausch, senior cross asset strategist at Commerzbank.

“Liquidity is more important than earnings growth at the moment, and we have record high money supply growth in the U.S. and Europe.”

However, UK-listed miner BHP Group (BHP.AX), (BHPB.L) fell 1.5% as its annual profit fell 4%, missing analysts’ estimate, while also warning that most major economies except China will have to bear the brunt of a coronavirus-led downturn this year.

Danish Jewellery maker Pandora (PNDORA.CO) tumbled 7.7% as it said the number of closed shops increased slightly in August, and the current level of store traffic is “well below” that was seen before the lockdowns.

Britain’s Marks & Spencer (MKS.L) reversed early gains to trade 3.7% after it revealed plans to cut a further 7,000 jobs, dealing the latest blow to the beleaguered retail sector from the COVID-19 crisis.

Swiss plumbing materials company Geberit (GEBN.S) gained 2.0% as it expects the construction sector to return to normal in the second half of the year, provided there is not another wave of COVID-19-related lockdowns.

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