European shares hit by Italy fears and Daimler warning

FTSE 100 ends lower after sterling climbs on interest rate speculation

Traders working on the floor of the New York Stock Exchange. Photograph: Brendan McDermid/Reuters

Traders working on the floor of the New York Stock Exchange. Photograph: Brendan McDermid/Reuters

 

European shares were back in the red on Thursday after a modest rebound on Wednesday. Italian stocks were weak following the appointment of eurosceptics to key positions in the Italian parliament, while UK blue-chips were hit when the Bank of England’s chief economist unexpectedly joined those calling for an interest rate increase.

Car stocks fell 3.5 per cent, the sector’s biggest loss in about two years, after German carmaker Daimler warned that higher tariffs would hit profits.

Dublin

The Iseq index closed down 0.55 per cent, containing its losses for the day compared to the major European indices thanks in large part to a near 1.4 per cent gain for Ryanair, with the airline closing at €16.55 as oil prices fell.

Cairn Homes, Glenveagh Properties, Hibernia Reit and Irish Residential Properties Reit also finished up on a good day for stocks connected to the housing market, while Dalata Hotel Group was up 3.9 per cent at €6.92.

Building materials group CRH was down 1.7 per cent at €30.96, however, while paper and packaging company Smurfit Kappa couldn’t continue its recent climb, dropping 0.6 per cent to €34.78.

London

The UK’s top share index fell as sterling bounced from seven-month lows following a Bank of England policy vote that bolstered expectations of an interest rate increase in August. The surprise pushed sterling higher that in turn sent the FTSE 100 down, with the export-oriented index closing 0.9 per cent lower.

British housebuilders were hit by the prospect of higher rates. Barratt Development and Persimmon both fell 3.7 per cent, while Taylor Wimpey lost 3.1 per cent.

Financials and energy stocks weighed on the FTSE as expectations of an Opec deal to raise output sent oil prices tumbling.

Royal Dutch Shell fell 1.1 per cent and BP 0.9 per cent. Sky rose for a second day, up 1.8 per cent, after Disney raised its offer for the bulk of 21st Century Fox’s entertainment assets, including a 39 per cent stake in Sky. The move has raised speculation Fox will in turn raise its bid for all of Sky, to top a bid from Comcast.

Europe

The pan-European Stoxx 600 tumbled 0.9 per cent as fears about the ongoing US-China trade dispute lingered on.

In Germany, the Dax was down 1.44 per cent after Daimler became one of the biggest global companies to cut its guidance on trade tensions, warning profits would be hit in part by Chinese tariffs on car imports from the US. Daimler shares fell 4.3 per cent to their lowest in nearly two years.

Volkswagen fell 3.1 per cent and BMW 2.9 per cent while other heavy exporters listed in Frankfurt also slumped.

The Italian FTSE MIB fell 2 per cent after the Italian government appointed two eurosceptics to head key finance committees. The French Cac 40 also declined more than 1 per cent as investor sentiment turned negative.

New York

US stocks were on track to close lower as oil prices slid, industrials dropped on worries over US-China trade spat and Amazon led a decline in online retailers after the Supreme Court let states force the companies to collect sales tax.

Amazon dropped as much as 1.9 per cent, before paring losses to trade down 0.3 per cent. Wayfair, Overstock.com, Etsy, Ebay and Shopify fell between 1.9 per cent and 4.3 per cent.

Intel retreated 1.8 per cent after chief executive Brian Krzanich resigned following a probe that revealed a past consensual relationship with an employee violated company policy.

Big US manufacturers extended their slide after a state-controlled Chinese tabloid said Beijing could target members of the Dow Jones if trade tensions exacerbate. Caterpillar dropped 0.8 per cent and Boeing was down 1.2 per cent, while the auto sector fell in sympathy with Germany’s Daimler. – Additional reporting: Reuters