UPDATE 2-Trade talks keep European shares afloat as Sainsbury's, Swedbank sink

  • Reuters
  • Stock Market News
UPDATE 2-Trade talks keep European shares afloat as Sainsbury's, Swedbank sink
Credit: © Reuters.

* STOXX 600 up 0.7 pct

* Autos gain on trade talks progress

* Sainsbury's sinks as regulator objects to Asda deal

* Swedbank falls on reported links to money laundering scandal (Adds closing prices)

By Helen Reid

LONDON, Feb 20 (Reuters) - Trade talks between the world's two biggest economies helped European shares rise on Wednesday, while the threat of a blocked merger sank shares in British supermarket Sainsbury's and a money laundering scandal hit Swedbank.

Germany's trade-sensitive DAX .GDAXI led the way with a 0.8 percent gain and the pan-European STOXX 600 .STOXX rose 0.7 percent after U.S. President Donald Trump said on Tuesday that trade talks with China were going well.

Although autos .SXAP , which are vulnerable to rising protectionism, jumped 2.4 percent but there were still reasons for investors to remain cautious.

"There's no big material news out there that will give us a sustained uptick to markets," Gary Waite, portfolio manager at Walker Crips Investment Management, said.

British supermarket chain Sainsbury's and Swedish lender Swedbank marred the positive picture overall.

Sainsbury's SBRY.L shares sank 18.5 percent after Britain's competition regulator said its merger with Asda should either be blocked or need significant concessions. are rightly accepting that this deal is dead in the water", commented Neil Wilson from Markets.com.

Britain's retail index .FTNMX5330 fell 2.9 percent with rivals like Morrison MRW.L losing 5.3 percent.

Swedbank SWEDa.ST shares ended the day 13.6 percent down after Estonia said it was investigating allegations linking Swedbank SWEDa.ST to suspicious transactions in the country involving Danske Bank DANSKE.CO . top gainers -- Glanbia and Simcorp -- were boosted by strong results.

Irish nutrition company Glanbia GL9.I jumped 12.9 percent after its fourth-quarter results, while Danish software company Simcorp SIM.CO also rose 7 percent after announcing strong results and a share buyback programme.

"Glanbia's FY results confirm a strong finish to 2018 and were ahead of forecasts at the revenue, EBITA and EPS reporting lines," said Davy Research analysts, adding they upgraded their full-year 2019 EPS forecasts by 5 percent.

Fresenius FREG.DE shares jumped 5 percent after it said it expects earnings to grow faster than sales from 2020 after investments dent profit this year. France-KLM AIRF.PA took 6.1 percent after it pledged new efficiency gains to offset higher fuel costs this year.

Overall, analysts have been overwhelmingly negative on European earnings, downgrading their estimates consistently.

"While the earnings season is OK, if you look at forward looking guidance it doesn't strike me as if there's a reason to be too bullish on markets going beyond the end of this year," said Walker Crips' Waite.

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