CORRECTED-UPDATE 1-Trade tariff reprieve triggers relief in European shares

  • Reuters
  • Stock Market News
CORRECTED-UPDATE 1-Trade tariff reprieve triggers relief in European shares
Credit: © Reuters.

(Corrects name of Unigestion analyst to Dutu, not Ekolo)

* STOXX 600 climbs to October highs

* Autos, mining stocks lead

* Weaker net interest margin hits Bank of Ireland

* Covestro falls after results

* AMS jumps

By Helen Reid

LONDON, Feb 25 (Reuters) - U.S. President Donald Trump's decision to delay an increase in tariffs on Chinese goods drove European shares to their highest since October as carmakers and mining companies rallied.

The pan-European STOXX 600 .STOXX was up 0.3 percent by 0930 GMT and Germany's trade-sensitive DAX .GDAXI rose 0.5 percent. The STOXX hit 373.18 in early deals, its highest since Oct. 10.

Trump said on Sunday he would delay the March 1 deadline for a tariff increase after "productive" trade talks and that he and Chinese President Xi Jinping would meet to seal an agreement if progress continued. shares .SXAP jumped 1.6 percent to their highest since early November and basic-resources stocks .SXPP rose 0.9 percent as the tariff reprieve triggered relief for companies most at risk from slower global trade.

Car-parts makers Valeo VLOF.PA and Faurecia EPED.PA were among the top performers, up 2.6 to 3.4 percent. Steel companies Arcelormittal MT.AS and Norsk Hydro NHY.OL and commodity trader Glencore GLEN.L all rose more than 2 percent.

Investors stayed cautious, though.

"I believe the easiest part is done," said Stephane Dutu, fundamental analyst at Unigestion in Geneva. "I believe Mr Trump has oversold the positive aspects of the discussions ... the overall deal will be less impressive than what the Chinese and especially Mr Trump are saying about it."

Disappointing results drove some significant declines. Shares in Bank of Ireland BIRG.I dropped 7.5 percent after the bank cut its outlook for 2019 and reported a weaker fourth-quarter net interest margin (NIM). weaker Q4 NIM and a lower outlook for 2019 weigh on near-term forecasts, while guided regulatory capital consumption is higher than anticipated," wrote Davy Research analysts.

Covestro 1COV.DE shares fell 3.7 percent after the German chemicals group said its 2019 core earnings may fall as low as half of last year's level. fourth-quarter earnings have been disappointing, and analysts have been steadily cutting their expectations for European earnings growth.

However, Italy's FTSE MIB .FTMIB outperformed the market, climbing 1 percent as government bonds jumped after Fitch affirmed the country's BBB credit rating. in banks .FTIT8300 , which have significant government bond holdings, jumped 2.3 percent.

M&A was also a driver: French healthcare company Ipsen IPN.PA fell 2 percent after agreeing to buy U.S. peer Clementia Pharmaceuticals CMTA.O in a deal worth up to $1.31 billion. PTNL.AS surged 9.6 percent, set for its best day in more than two years, after saying it planned to buy its main rival Sandd for an estimated 130 million euros. AMS AMS.S climbed 6.6 percent to the top of the STOXX after it introduced a new component for mobile 3D sensing applications. earnings revisions over time


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