European shares drop amid concerns on trade and German coalition

European shares dropped on Monday amid concerns about US trade policies and the stability of German chancellor Angela Merkel’s coalition government.

The pan-European STOXX 600 ended the session down 0.8 per cent with losses across the continent and sectors.

DUBLIN

The Iseq index declined by 0.8 per cent to 6,927.22, with Paddy Power Betfair, down 4 per cent at €91.20, and Ryanair, which fell 1.9 per cent to €15.50, among the main heavyweight decliners.

Rumours of GE’s demise may have been exaggerated

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US futures hold ground, but European shares struggle for direction

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Stocks struggle as concerns linger about impact of trade war

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Permanent TSB was also out of sorts, falling 2.3 per cent to €1.95, as investors fretted about a potential mortgage-price war, which could squeeze lending margins.

Bucking the trend, shares in frozen baked goods group Aryzta jumped 8.5 per cent – albeit amid thin trading volumes – to €13.45, to start off the second half of the year on a firmer footing. The group had lost 62 per cent of its value in the first six months of 2018, making it the worst performer on the Iseq.

LONDON

Britain's index of leading shares began July on a negative note as worries over global trade kept the pressure on banking and mining stocks, though Micro Focus was lifted by news of the sale of one its software businesses.

The blue chip FTSE 100 index ended the session down 1.2 per cent at 7,547.85 points, slightly underperforming a broadly negative European market which was hit by concerns over global trade and German politics.

Market sentiment remains tense ahead of a July 6 deadline when the US is set to impose $34 billion of tariffs on Chinese exports. Miners Rio Tinto, Glencore, Anglo American, Antofagasta and BHP Billiton all fell between 3 per cent to 3.5 per cent as the price of copper hit a three-month low.

Playtech was a prominent faller, its shares down more than 26 per cent after the gambling technology company said that revenue from Asia would be lower than originally expected.

There were a few risers, however, with software company Micro Focus rising 1.5 per cent after it said that it had agreed to sell its Linux operating system SUSE business to a private equity fund for $2.535 billion.

EUROPE

Germany’s DAX index lost 0.6 per cent as traders in the Frankfurt market kept their focus on Berlin, where Dr Merkel was battling to keep her government together amid a row over immigration.

However, shares in German consumer electronics retailer Ceconomy were up 8.6 per cent after news that telecoms company Freenet would acquire a 9 per cent stake.

In Paris, Airbus shares fell 2.5 per cent after Bloomberg News reported the European planemaker would miss its delivery target for Pratt & Whitney-powered A320neo narrow-body jets this year.

French supermarket retailer Carrefour and British peer Tesco lost 0.9 per cent and 0.2 per cent respectively after they announced plans to form a global long-term purchasing alliance, as they seek to cut costs.

"An entente cordiale between the two giants of British and French retailing is yet another sign that squeezing the cost base is the biggest priority for supermarkets as they seek to contain the discounters and protect margins," said Neil Wilson chief market analyst at Markets. com.

NEW YORK

US stocks clawed back from earlier declines to midafternoon trading in New York, as investors began to look past potentially rising global trade tensions. The dollar climbed, roiling emerging markets, while oil drifted lower as President Donald Trump called for Saudi Arabia to increase production in order to reduce prices.

The S&P 500 Index was down slightly, as weakness in energy was offset by strength in technology and utilities, while the Nasdaq index climbed.

Nike was out of sorts as Roger Federer's 20-year association with the brand was hanging by a shoestring when the Wimbledon champion walked on to Centre Court to open the defence of his title wearing a Uniqlo branded outfit.

Shares of casino companies fell as gambling revenue in the Chinese territory of Macau rose less than expected in June, which Bank of America said was due to the Fifa World Cup, the fading policy stimulus and trade tension in China.

– Additional reporting, Bloomberg, Reuters