European shares drop as Brexit and ECB comments weigh

European shares dipped on Thursday as investors concluded that UK prime minister Theresa May’s survival of a no-confidence vote did little to remove uncertainty over Brexit, while European Central Bank president Mario Draghi warned that risks to the euro zone economy are worsening.

Mr Draghi’s comments came even as he confirmed that the ECB’s bond-buying programme would come to a close by the end of this year.

The pan-European Stoxx 600 index closed the session down 0.2 per cent, following a two-day rally.

DUBLIN

The Iseq index in Dublin bucked the trend, rising 0.2 per cent to 5,536,33, with market heavyweights including CRH, up 1.2 per cent to €22.76, Kerry Group, up 1.2 per cent to €90 and Bank of Ireland, up 1.1 per cent to €5.05, among the main advancers.

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IFG jumped 7.4 per cent to €1.60, clawing back some of the ground lost in the past year, as the financial services group outlined ambitious revenue growth targets that analysts concluded will lead to earnings estimates upgrades.

Irish Continental Group inched 0.3 per cent higher to €4.70, after the company reported after markets closed on Wednesday that it had finally taken delivery of a new cruise ferry, called WB Yeats, which will begin scheduled services next year.

Insurer FBD Holdings lost 4.5 per cent to €8.10 as investors concluded that its investment returns will not be helped by the ECB's signal that it would take its time tightening monetary policy as the organisation lowered its immediate forecasts for euro zone inflation and growth.

LONDON

The mid-cap FTSE 250 index ended the day down 0.8 per cent, giving up early gains as worries that a disorderly Brexit would hurt the economy returned. Half of mid-caps’ income is generated in the UK. The FTSE 100 ended the day flat with oil and consumer stocks lagging.

Housebuilders tumbled, lagging the broader market after early gains. Taylor Wimpey and Persimmon fell 0.6 per cent to 1 per cent, and Barratt Development lost 2.8 per cent.

London-listed shares in German tour operator TUI climbed 5.3 per cent, as the company reported better-than-expected annual earnings and forecast a robust year with strong margins in its hotel and cruise business.

Sports Direct shares tanked, falling 13 per cent after the retailer reported weak results and chief executive Mike Ashley said trading in November was "unbelievably bad", highlighting a growing sense of gloom among British high streets in the peak Christmas season.

EUROPE

German wholesaler Metro lost 11 per cent after the group forecast a fall in earnings due to its struggling Russian business.

Swiss asset manager GAM plummeted 22 per cent to its lowest level in two decades after it posted a large loss and omitted a dividend.

However, Italian stocks outperformed as the government cut its budget deficit target for 2019 in an effort to effort to end a standoff over the issue with the European Commission.

Shares in Banca Mediolanum rose 1.9 per cent and fellow banking group Unicredit rose 1.2 per cent.

NEW YORK

US stocks edged lower in volatile early afternoon trading, as a rally sparked by progress in US-China trade talks faded, with investors preferring defensive sectors such as real estate and utilities.

Wall Street opened higher after a Chinese commerce ministry spokesman said Washington and Beijing were in close contact over trade, and any US trade delegation would be welcome, adding to the optimism over trade progress between the two economic giants.

The Dow Jones Industrial Average dipped by 0.05 per cent, while the S&P 500 lost 0.3 per cent, and the Nasdaq declined 0.6 per cent.

Retail stocks dropped, with Under Armour sliding after the sportswear maker forecast 2019 revenue growth and profit below analysts estimates.

Procter & Gamble rose after Bank of America Merrill Lynch upgraded the consumer goods maker's stock to "buy" from "neutral".

General Electric jumped after JP Morgan upgraded the industrial conglomerate's shares to 'neutral'.

– Additional reporting: Reuters