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European shares were lower on Monday with Hennes & Mauritz among the main losers after disappointing sales growth figures, while Telecom Italia shone after lifting its cost cutting goal.
By 0746 GMT, the pan-European FTSEurofirst 300 index was down 0.66 per cent. Volumes were likely to remain with the German market closed for a public holiday.
The FTSEurofirst is down by around 9 per cent so far in 2016, with global stock markets affected by concerns about weakness in China, the world’s second-biggest economy.
Doubts about whether China’s economy is stabilising resurfaced over the weekend when data showed investment, factory output and retail sales in the country all grew more slowly than expected in April.
JCI Capital portfolio manager Alessandro Balsotti said in a note the renewed concerns over the Chinese economy could affect markets this week amid the absence of any other key macroeconomic data to focus on.
Hennes & Mauritz fell 1.5 per cent, making it one of the top losers on the FTSEurofirst, after the Swedish budget fashion retailer reported a 5 per cent increase in April sales, below the 9 per cent expected by analysts polled by Reuters.
Prudential Plc also fell 1.3 per cent, after Morgan Stanley cut its price target on the stock, although the investment bank kept an “overweight” rating on Prudential.
Telecom Italia rose 3.7 per cent. Italy’s biggest telecoms group more than doubled the cost cutting target in its new business plan after reporting a larger-than-expected 16 per cent drop in first-quarter core profit, hit by one-offs and persistent weakness in its key Brazilian market.
“The positive surprise on cost savings would justify a double-digit share price performance,” said Banca Akros analyst Andrea De Vita.
Basic resources stocks and oils stocks were the only two sectoral gainers with a rise of 1.4 per cent and 0.2 per cent, respectively.
South Africa-focused platinum producer Lonmin soared 14 per cent. Its first-half core profit was $36 million, up from a loss of $6 million the same time a year ago following cost savings, which were well ahead of schedule.
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