European shares edge up as strong banks offset trade woes

European shares inched up on Monday as banks gained, although trade-exposed sectors like autos suffered after US President Donald Trump raised the stakes in the trade dispute with Beijing.

The pan-European STOXX 600 index added 0.25 per cent by 0821 GMT after ending on Friday just above its lowest close since early April. The export-oriented DAX fell 0.1 per cent and the FTSE rose 0.1 per cent.

Late on Friday, Trump had warned he was ready to impose tariffs on virtually all Chinese imports, threatening duties on another $267 billion of goods on top of $200 billion worth set for levies in coming days.

“The looming likelihood that the week will see further ramping up of the US-China trade war with Trump potentially enraged by the news that China's trade surplus with the US hit a record high in August led to a quiet start to Monday,” said Spreadex analyst Connor Campbell.

Autos, which rely on exports, led the declines, down 0.3 per cent. Shares in Apple suppliers like Dialog Semiconductor and AMS came under pressure after Trump said the iPhone maker should move production to the US to avoid the tariffs.

Italian banks rose as the country's government bonds rallied. Italy's economy minister predicted yields would drop when the government laid out its budget for 2019 .

Shares in Banco BPM and Mediobanca rose more than 4 per cent. UniCredit gained after its chairman said the bank, Italy's largest by assets, would assess strategic options as it planned for 2019. He was responding to a question about a possible merger with Societe Generale .

On Sunday, Josef Ackermann, former CEO of German lender Deutsche Bank, had said in an interview with Bloomberg TV that Europe needed bank mergers to create a regional champion.

German lenders Deutsche Bank and Commerzbank , which have been rumoured as possible partners, rose 0.1 and 2.2 per cent respectively. Elsewhere, Richemont rose 1.5 per cent as the Cartier maker appointed Jerome Lambert CEO and posted a 10 per cent rise in five-month sales.

“His appointment is likely to be welcomed amid some investor concerns about a long-term successor at the group,” said Kepler Cheuvreuz analyst Jon Cox, affirming a buy rating on the stock.

“The strong sales figure is likely to support a stock that has drifted versus peers and trades at almost a 30 percent discount,” he added in a note.

The solid update supported shares in peer Swatch, which gained 0.8 per cent. In the UK, RPC Group soared 21.3 per cent after Europe's biggest plastics packager said it was in early talks with funds about a takeover offer for the company. It was the biggest gainer on the STOXX.

AB Foods fell more than 3 per cent with traders citing the gloomy outlook of its sugar business. Earlier on Friday, the company had maintained its full-year guidance, saying the performance of its Primark fashion chain, grocery, agriculture and ingredients businesses would more than offset a weak sugar operation.

COMMENT NOW