* STOXX 600 up 0.2 pct on the day, down 4.7 pct on the quarter
* Renault at more than 10-yr high on Nissan merger talks
* GKN surges after Melrose secures bid
* Sodexo plunges after cutting its outlook
(Adds closing prices)
By Helen Reid and Julien Ponthus
LONDON, March 29 (Reuters) - Merger and acquisition activity gave European shares some relief on Thursday after a tech-led sell-off across global markets earlier in the week, but the STOXX 600 still posted its worst quarter in the last two years.
The STOXX 600 ended the month on a positive note, up 0.44 points at 370.87 points, but closed the quarter down 4.7 percent despite starting with a global equities rally in January.
The quarter developed into a challenging one for stock markets with investors navigating a sharp spike in volatility, rumbling trade tensions and anxiety over the tech sector.
In Europe, slowing macroeconomic indicators have been taken as a "sell" signal for equities, which had enjoyed a lift most of last year on expectations of stronger economic growth.
"Support from attractive valuations and fading FX headwinds is not enough to override the signal from relative macro surprises," said Deutsche Bank (DE: DBKGn ) equity analysts, reaffirming their underweight position on European equities versus the U.S.
Auto stocks .SXAP led gains as Renault RENA.PA jumped 5.7 percent to a more than 10-year high after Bloomberg reported the French firm was in talks to merge with Nissan. of dealmaking spread to other auto stocks, driving them up too. Daimler DAIGn.DE , Peugeot PEUP.PA , Porsche PSHG_p.DE and Volkswagen VOWG_p.DE rose 3.4 to 4.4 percent.
M&A also drove stock gains in other sectors.
GKN GKN.L shares surged about 9 percent after Melrose Industries MRON.L announced it had narrowly clinched its 8 billion-pound ($11 billion) takeover of the British engineer after a three-month battle for control of the FTSE 100 company.
Meanwhile services group Sodexo EXHO.PA sank 15.7 percent after cutting its full-year sales and profit margin outlook, reporting a weaker than expected second quarter. management guidance, we see potential for consensus EBIT downgrades of over 10 percent and material share price pressures, near term," said UBS analysts.
While cyclicals like autos and industrials had a positive session, defensive sectors have also enjoyed something of a revival as investors rush to areas traditionally seen as safer, with stable earnings and high dividends.
"Should concerns about a trade war escalate, defensive stocks would likely outperform ... We would be wary of cyclicals, in particular international ones," wrote Goldman Sachs (NYSE: GS ) analysts.
Positioning on cyclicals is elevated, Barclays (LON: BARC ) analysts found. Both European and global funds have increased their cyclicals exposure to near the highest levels in the last decade, adding especially to financials, tech and industrials.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Q1 2018 a wild ride for stocks
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.