UPDATE 2-European shares surrender to falling bank, tech stocks as Wall Street slides

  • Reuters
  • Stock Market News
UPDATE 2-European shares surrender to falling bank, tech stocks as Wall Street slides
Credit: © Reuters.

* STOXX50E down 1 pct, STOXX 600 down 0.5 pct

* Heidelberg Cement slides 8.6 pct on profit warning

* Strong Publicis update lifts media sector

* Carrefour jumps 9 pct after Q3 sales rise (Updates prices, adds quotes, graphic)

By Julien Ponthus and Helen Reid

LONDON, Oct 18 (Reuters) - European shares swung back into the red on Thursday as fears of rising rates and disappointing earnings from U.S. industrials dragged Wall Street down, while HeidelbergCement's profit warning sank European construction stocks.

The euro zone's leading stocks index .STOXX50E attempted a recovery but finished the day down 1 percent while the pan-European STOXX 600 .STOXX index slipped 0.5 percent and Germany's DAX .GDAXI slid 1.1 percent.

A weaker open on Wall Street sent European stocks south. U.S. stocks fell across the board as weak earnings reports from industrial firms triggered worries over climbing costs and the impact of tariffs. Europe's third-quarter earnings season is kicking up a gear after indexes hit a 22-month low last week when jitters over rising U.S. bond yields and geopolitical worries rattled global markets.

"A reality check with companies is clearly welcome with global uncertainties related to trade flows," said Kepler Cheuvreux analysts.

French supermarket operator Carrefour CARR.PA jumped up 9.3 percent as it reported a sales growth acceleration in France and Brazil outweighing weakness in Southern Europe. food-driven volume recovery is a key element to a successful, sustainable food retail turnaround and there are signs that Carrefour is beginning to deliver on this," said HSBC analysts.

Tech .SX8P was the worst-performing European sector, down 2.1 percent, with banks .SX7P down 1.7 percent as investors shed stocks most sensitive to the economic cycle.

Spanish banks Banco Sabadell SABE.MC , Bankinter BKT.MC , Bankia BKIA.MC , Caixabank CABK.MC , BBVA BBVA.MC , and Santander SAN.MC all fell between 2 and 6.7 percent after the Supreme Court ruled banks must pay stamp duty on mortgage loans, potentially costing them billions of euros in compensation. biggest earnings disappointment was HeidelbergCement HEIG.DE , one of the world's largest cement makers, which fell 8.6 percent after it cut its profit guidance for 2018, citing bad weather in the United States and higher-than-expected energy cost inflation. issues are not entirely unexpected but the impact is modestly higher than expected," said UBS analysts.

Other European construction materials firms tumbled too: Buzzi Unicem BZU.MI fell 6.4 percent, LafargeHolcim LHN.S fell 3.9 percent and CRH (LON: CRH ) CRH.I down 4.4 percent.

Media .SXMP was among the best-performing sectors, up 0.4 percent, lifted by French advertising agency Publicis PUBP.PA which reported stronger third-quarter sales pushing its shares up 3.8 percent.

The media sector has now overtaken the tech sector as Europe's top-performing this year, in a sign of the waning dominance of tech.

The telecoms sector .SXKP also gained, boosted by Sweden's Tele2 TEL2b.ST which rose 4.7 percent after lifting its guidance on better-than-expected results. telecom equipment maker Ericsson (BS: ERICAs ) ERICb.ST also surged up 6.2 percent after its third-quarter profit topped forecasts, boosted by sales of next-generation 5G gear in North America. NOVN.S shares rose 1.8 percent after the Swiss pharmaceutical company announced it would acquire U.S.-based cancer drugmaker Endocyte ECYT.O for $2.1 billion in cash in an expansion of its radiopharmaceuticals business. is less about the earnings number and more about the company's transition to much more of a pure-play pharma business, which seems to be going down well with investors who have shown increasing interest in this name over the past few weeks," said Berenberg analysts.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ media overtakes tech as top European sector


^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Julien Ponthus and Josephine Mason; Editing by Alison Williams)

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