European shares weighed down by earnings reports, weak data

Reuters November 6 | Updated on November 06, 2019

The pan-European STOXX 600 index struggled for direction after rising about 0.1 per cent in early trading. File Photo   -  Bloomberg

European shares took a breather on Wednesday after closing at a four-year peak in the previous session, as a mixed bag of earnings reports and weak services sector data from the euro zone weighed on sentiment.

Societe Generale shares rose 4.6 per cent to a six-month high after the bank said it had set aside three-quarters of the cash needed to deliver a planned dividend payout this year.

The update helped power a 1 per cent rise in bank stocks, the most among the major European sub-sectors. The pan-European STOXX 600 index struggled for direction after rising about 0.1 per cent in early trading.

European shares have logged strong gains this week on growing optimism over a trade truce between the US and China.

Fresh data on Wednesday showed Germany's services sector barely grew in October, while euro zone business activity expanded slightly faster than expected last month, but remained close to stagnation.

“There is a little bit of a holding pattern after the optimism we saw on the trade front and the effect is just slowly wearing off,” said Chris Beauchamp, chief market analyst at IG Group.

“There is also a nagging sense that maybe this market has moved too fast too quickly so we could just move lower on some short-term weakness.”

The European retail sector gained 0.3 per cent after better-than-expected earnings from Britain's Marks and Spencer and Dutch supermarket operator Ahold Delhaize.

Swiss chocolate maker Barry Callebaut fell 4 per cent after reporting a slowdown in its most recent quarter, while Italy's postal service provider Poste Italiane dropped 1.2 per cent due to a lacklustre performance of its mail and parcel business in the third quarter.

Shares of Norwegian Air fell 9 per cent after the struggling budget carrier conducted its third share issue in less than two years late on Tuesday.

Published on November 06, 2019

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