European shares fall on US and China trade war fears

European shares fell on Monday as concern grew over the escalating protectionist standoff between China and the US, with CRH and Ryanair among heavyweight decliners in the Irish market.

The pan-European Stoxx 600 index fell by 0.8 per cent to 385.91.

Dublin

Datalax, the travel software firm, was the worst performer in the Irish market, falling by 5.3 per cent to €2.70, as investors were unexcited by the group's reiteration of its guidance that earnings will rise by a double-digit percentage for the ninth straight year.

CRH was also out of sorts, falling 1.6 per cent to €31.84, as investors fretted about the effects on global trade and growth amid an intensifying confrontation between the US and China. The Asian nation swiftly responded after President Donald Trump slapped tariffs on $50 billion (€43 billion) of imports late last week, putting an additional 25 per cent levy on $34 billion of American agricultural and auto exports starting July 6th.

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Ryanair dropped 1.1 per cent to €15.87 as oil prices rose before a key meeting of the Organisation of Petroleum Exporting Countries later this week and as the airline's stock suffered a broker downgrade from Société Générale to "hold" from 'buy'.

Bucking the trend, Bank of Ireland rallied 0.6 per cent to €6.70 following four days of losses, helped by an upgrade from Bank of America Merrill Lynch to 'buy'. Still, ratings agency Fitch said that while the bank's aim, outlined last week, to grow its loan book by 20 per cent by the end of 2021 may boost profits, it could prove problematic if it is "heavily skewed to higher-risk sectors or materially outpaces economic growth".

London

The FTSE 100 fell 0.03 per cent to its lowest since May 30 but substantially outperformed other European stock markets as strong energy stocks underpinned the blue-chips index, while weaker sterling also boosted the market’s mainly exporting companies.

Oil majors BP and Royal Dutch Shell turned from the biggest drag to the biggest boost to the index, rising 1.2-1.3 per cent by the close.

Mid-cap oil services firm Petrofac declined 1.3 per cent as a negative note from Morgan Stanley weighed.

Shares in Ocado fell to their lowest in 10 days, down 7.8 per cent, on the online grocer's first day of trading on the FTSE 100.

In dealmaking news, mid-sized bank CYBG, led by Irish banker David Duffy, sealed a deal to acquire Virgin Money for £1.7 billion, creating Britain's sixth-largest bank by assets.

Virgin Money shares initially rose more than 2 per cent, before reversing course to end the day down 2.2 per cent. CYBG shares were down 0.7 per cent.

Europe

Germany’s Dax declined 0.8 per cent, underperforming the broader European market amid worries that a crisis over migration policy could destabilise Angela Merkel’s three-month-old coalition government.

Car maker Volkswagen suffered the most, down 2.8 per cent to €154.20, after the chief executive of its Audi unit was arrested in connection to the wider group's "Dieselgate" emissions cheating scandal.

French gas and power group Engie fell 4.8 per cent after saying unscheduled outages at its Belgian nuclear reactors will have an impact of €250 million on its 2018 core and net profit.

Norwegian Air Shuttle rose 10.1 per cent after Lufthansa said it was in contact with the Norwegian carrier over a possible combination.

New York

The three major US stock indexes were trading lower in early afternoon trading, but came off session lows, as gains in energy shares eased fresh concerns over a possible trade war following China’s retaliation against US tariffs.

Boeing, the single largest US exporter to China, fell, while construction equipment maker Caterpillar also declined.

The Dow Jones Industrial Average was down 0.7 per cent, at 24,927.65, on track for a fourth straight session of losses. The S&P 500 lost 0.4 per cent, and the Nasdaq Composite was down 0.2 per cent.

Among other stocks, Valeant Pharmaceuticals' US-listed shares fell nearly 8 per cent after the US health regulator declined to approval the company's plaque psoriasis treatment lotion.

– Additional reporting, Reuters, Bloomberg