The Mercedes-Benz logo is seen before the company's annual news conference in Stuttgart, Germany, in this file picture taken February 4, 2016. German automaker Daimler said on February 9, 2016 it would recall 840,000 U.S. vehicles with Takata airbag inflators that could be defective, a step that would result in a charge of 340 million euros ($383.96 million). Daimler said it had decided to recall approximately 705,000 Mercedes-Benz cars and about 136,000 Daimler vans. It did not immediately respond to a question about which models are being recalled. REUTERS/Michaela Rehle/Files
LONDON: European equities ended lower after a choppy session on Thursday, dragged down by exporters as the euro strengthened against the dollar after the US Federal Reserve flagged fewer rate rises this year than previously expected.
Mining companies, however, were among the beneficiaries as a weaker dollar made metals more affordable to consumers who buy them in non-dollar denominated currencies, boosting metals such as copper and aluminium.
The pan-European FTSEurofirst 300, Germany’s DAX and France’s CAC closed 0.1% to 0.9% lower, a day after the Fed held rates steady and indicated that while moderate US economic growth and “strong job gains” would allow it to raise rates this year, policymakers now expect two quarter-point increases by the end of the year, half the number forecast in December.
The European automobile index slipped by 1.1%, pressured by falls of between 1.2% and 2.0% for BMW, Daimler, Renault and Peugeot, which feature among the big European exporters.
“Stocks are moving lower on the back of the euro’s advance. We’re just consolidating some of the gains made over the last month,” said Clairinvest fund manager Ion-Marc Valahu, pointing to the FTSEurofirst’s 10% gain over the past month.
Some analysts remained positive on the market’s outlook.
“European equities seem to be struggling at the moment because we have so many uncertainties. But investors are clearly searching for yield and still see opportunities in Europe, where equities are undervalued and the central bank’s policies are very supportive,” said Dennis Jose, head of European equity strategy at Barclays. “On valuations grounds, Europe looks attractively priced.”
The European Banks index fell 1.2%, with KBC, Deutsche Bank, Unicredit and Commerzbank down by between 2.4% and 4.2%.
Bucking the trend, the STOXX Europe 600 Basic Resources index surged 6.4% on the dollar weakness. Shares in Glencore, Antofagasta, BHP Billiton and Rio Tinto jumped by between 5.4% and 9.5%.
Among other big movers, Banco Popolare slumped 14%, hit by speculation that merger talks with Banca Popolare di Milano to create Italy’s third-largest lender could break down.
The stock also came under pressure after Reuters reported that the European Central Bank has sent a letter to the two companies setting out conditions for approval of the merger.
Banca Popolare di Milano was down 5.6%.
Immofinanz shares fell 11.5% after reporting a loss, while Vienna Insurance slumped 17.9% after its results disappointed investors. - Reuters
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