European stocks claw back losses

Spread the love

LONDON (Reuters) – European stocks managed a modest rise on Friday, recovering from the previous session’s sharp fall thanks to a recovery in oil prices, while weak results from Michelin and Bouygues reignited investors’ concerns about autos and construction stocks.

The leading index of euro zone stocks .STOXX50E rose 0.2 percent by 0727 GMT while the pan-European STOXX 600 was up 0.1 percent.

Italian stocks tumbled 0.4 percent after a ramp-up in rhetoric from the European Commission with Brussels sending Rome a letter demanding an explanation for its budget plans which represented an “unprecedented” breach of EU fiscal rules.

Italy’s bank stocks index .FTIT8300 tumbled 1.2 percent.

As results flowed in, some trends were discernable including companies flagging slower growth in China, weaker car demand, and issues in the construction sector.

Shares in tyre maker Michelin (MICP.PA) tumbled 5.6 percent after it cut its sales outlook and downgraded its tyre market growth forecasts, blaming slowing Chinese car demand and new emissions testing regulations.

French conglomerate Bouygues (BOUY.PA) fell 6.5 percent to the bottom of the CAC 40 after it cut its profit outlook due to difficulties in its construction businesses.

Britain’s Ashtead (AHT.L) fell 4.5 percent in sympathy.

Swedish builder Skanska (SKAb.ST) also fell 6 percent after saying it booked charges of 1.3 billion crowns ($143.81 million) in the third quarter relating to construction projects in the United States.

Overall the construction & materials sector .SXOP fell 0.3 percent, its second day of declines after a profit warning from Heidelbergcement on Thursday hit it hard.

Sopra Steria (SOPR.PA) was the top STOXX 600 faller. Its shares sank 18.5 percent after it cut its 2018 revenue forecast.

Among gainers, M&A was a driver for UK retail property developer Intu Properties (INTUP.L), which soared 14 percent to the top of the FTSE 250 .FTMC after saying it was considering a takeover offer from a consortium formed by British billionaire John Whittaker and Saudi Arabian and Canadian investors.