European shares fall as diplomatic tensions with Russia rise

European shares fell on Monday as a late surge in the euro and diplomatic tensions with Russia more than offset hopes that the protectionist shift in US trade policy may be more selective and tactical than first feared.

The regional Stoxx 600 benchmark fell 0.7 per cent to its lowest level since February 2017, having earlier gained as much as 0.6 per cent following reports the US and China had quietly started negotiations to improve US access to Chinese markets. "Exemptions on steel/aluminium tariffs have already been granted for other important trade partners, which suggests the US president is using this approach more for negotiating leverage rather than any real intention to start a global trade war," said Accendo Markets head of research Mike van Dulken.

He noted that China’s response so far was “measured” and “nuanced”. European equity markets, however, slipped into negative territory as the euro gained further strength.

DUBLIN

The Iseq fell 1 per cent to 6,443, tracking movements elsewhere. Smurfit Kappa fell 3.4 per cent to €33.56 after it rejected a revised takeover offer from International Paper. Its chairman Liam O'Mahony said that the new bid did "not offer Smurfit Kappa shareholders much more than compensation for the fall in International Paper's share price since [the original bid] and again fails to value" the group.

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PaddyPower Betfair fell 3.6 per cent to €81.50 following a media report that casino games in UK betting shops may soon be banned and that ministers plan to limit the maximum stake on fixed-odd betting terminals to the lowest amount possible.

Ryanair also dropped 1 per cent to €15.86, a drop that was put down to ongoing weakness in the airline sector.

Shares in Independent News & Media (INM) dropped 5 per cent to 9 cent, meanwhile, after the State's corporate watchdog confirmed its intention to seek the appointment of a High Court inspector to the company amid a suspected data breach.

LONDON

The FTSE 100 closed down 0.5 per cent at 6,888 points. Mining group Fresnillo jumped 3.7 per cent after Goldman Sachs analysts upgraded the stock to "buy" and added it to their "conviction list", based on their bullish position on gold. "Our commodities team is bullish on gold for the first time in more than five years based on higher inflation, rising EM wealth and concerns about an equity correction," wrote Goldman strategists, upgrading the whole gold mining sector. Randgold Resources also gained 1.5 per cent after the Goldman upgrade to "buy".

Among mid-caps, JD Sports led the pack, rising 3.9 per cent after agreeing to buy Finish Line, one of the largest retailers of athletic footwear and apparel in the US, for $558 million. "This US acquisition allows the company to enter the largest sportswear market in the world with a leading player with both a significant physical store footprint, together with an online presence," wrote Shore Capital analysts.

EUROPE

Romanian bank Raiffeisen rose 2.5 per cent, helped by a price target upgrade at Deutsche Bank, while Renault gained 0.3 per cent, Carlsberg slipped 0.5 per cent, and Italian cement group Buzzi Unicem dropped 3.2 per cent. Among other European benchmarks, Spain's Ibex dipped only 0.1 per cent, after the country's second ratings upgrade of the year led to a further outperformance of its bond market over euro zone peers. Italy's FTSE MIB underperformed, down 1.2 per cent, as speculation grows the anti-establishment 5-Star Movement and anti-migrant League might explore an alliance to form a government.

Other top gainers were Zurich Insurance and Indivior, both up more than 3 per cent.

NEW YORK

US stocks were higher on Monday as fears about a trade war between the United States and China eased following reports that the two countries were willing to negotiate tariffs and trade imbalances.

However, a 3 per cent fall in Facebook's shares weighed on tech stocks after the US Federal Trade Commission made public its investigation into the social network, which has come under fire for data privacy issues. Facebook hit a session low of $149, erasing its market capitalisation by $100 billion since the scandal unfolded last week.

Microsoft jumped 5.4 per cent and was the biggest driver of the three main indexes. Morgan Stanley raised its price target on Microsoft's stock, saying the software company could hit $1 trillion in market value with growing public adoption of the cloud and improving margins. Intel rose 3 per cent after brokerage Raymond James upgraded the stock to "market perform".

Additional reporting by Reuters and Bloomberg