European equities kept steady by surge in German utilities

| | Updated on: Oct 12, 2015
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A surge in the shares of German utility stocks propped up European equities on Monday, enabling the region’s stock markets to remain near one-month highs.

Germany’s DAX outperformed to rise 0.7 per’cent, with utilities RWE and E.ON surging by 13 per cent and 10 per cent, respectively.

The DAX outperformed a flat pan-European FTSEurofirst 300 index and the euro zone’s blue-chip Euro STOXX 50 index, with the FTSEurofirst remaining near a one-month high reached on Friday.

Both RWE and E.ON rose after the German Economy Ministry had said on Saturday that the operators of German nuclear power plants had set aside enough funds to pay for decommissioning the country’s reactors.

However, Rolls-Royce and Safran fell, with traders citing a negative impact on those shares from media reports over the weekend of a European regulatory probe into the airline maintenance market.

The DAX remains some 20 per cent below a record high of 12,390.75 points reached in April, hit by signs of a slowdown in China — the world’s second biggest economy — and some weak German data.

However, Hampstead Capital hedge fund manager Lex Van Dam said the DAX now looked in better shape.

“Finally some good news out of Germany, with the utilities RWE and E.On leading the way. I am quite constructive on the market,’’ he said.

Biotechnology group Novozymes fell 3.6 per cent after Goldman Sachs downgraded its shares to “sell’’ from “buy’’, but carmaker Fiat rose 1.7 per cent after Fiat disclosed the price range for the initial public offering of its Ferrari unit that could value Ferrari at close to $10 billion.

Published on January 22, 2018

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