European shares retreat from two-year highs

European shares pulled back from two-year highs on Tuesday, after treading water on Monday, as heavyweight defensive sectors dropped and some company earnings reports disappointed.

Wall Street also lost steam in the afternoon after earlier scaling to record levels, while the dollar rose, sending stocks sensitive to a stronger dollar down.

Dublin

The Iseq closed down 0.9 per cent, underperforming major European indices as its biggest stock, building materials group CRH, dropped 2 per cent to €30.70. Ryanair was soft, giving up 0.9 per cent to finish at €17.10, while paper and packaging group Smurfit Kappa slid 1.7 per cent to €26.40.

Food groups Kerry and Glanbia also fell, closing down 0.6 per cent at €84.49 and 0.8 per cent at €16.45 respectively.

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The real estate investment trust stocks Green Reit and Hibernia Reit posted gains, however. Green Reit finished up 0.7 per cent at €1.54, while Hibernia advanced 2.3 per cent to €1.51.

London

A sliding pound and buoyant oil prices failed to lift the mood in British shares on Tuesday as grim economic data and disappointing corporate earnings from G4S and Primark and Penneys owner Associated British Foods weighed on the FTSE 100 index.

Despite a positive start, the index of blue-chip shares ended the session down 0.65 per cent, roughly in line with European peers and as most sectors traded in negative territory.

Shares in the world’s largest security group G4S sank 4.7 per cent after the firm downgraded its revenue outlook for the rest of the year.

Associated British Foods fell 3.6 per cent after the chief executive said sugar profits would fall in 2017-2018 due to lower EU prices. The mood in the UK retail sector was also depressed after the British Retail Consortium (BRC) said shoppers cut back their spending last month at the fastest pace for any October since 2008.

Energy stocks provided some support as crude prices held around mid-2015 highs with BP rising 0.7 per cent, while mid-cap Tullow Oil, an Irish company with its main listing in London, was up 3 per cent.

Europe

The pan-European Stoxx 600 index reversed earlier gains to end the session 0.5 per cent lower, after trading at its highest level since August 2015 over the past few days. The Dax ended the session down 0.7 per cent after hitting a new high, while the Cac 40 in France was down 0.5 per cent.

Falls among health stocks and large consumer staples such as Nestle and AB Inbev weighed most. These sectors are sensitive to movements in the dollar, which rose.

A number of disappointing earnings updates also put a dampener on sentiment. BMW fell 2.8 per cent after its third-quarter earnings fell 5.9 per cent due to upfront costs for new technologies and models.

Chipmaker Dialog Semiconductor dropped 5.7 per cent following a cautious outlook for the fourth quarter.

However, German lighting maker Osram saw its shares reverse losses to end 5.7 per cent higher, the top STOXX gainer, after the market looked beyond the firm’s modest 2018 forecast to its plans for future growth.

New York

The S&P and the Dow traded flat in afternoon trading and the Nasdaq slipped on a weak forecast from travel services company, Priceline.

Shares of Priceline fell 11 per cent and that of travel-review website operator TripAdvisor hit a five-year low after the companies gave soft fourth-quarter profit forecasts.

Investors are also waiting for more clarity on President Donald Trump’s tax-cut plan as the earnings season winds down. Republicans plan to bring their tax overhaul bill for a vote next week.

Weight Watchers put on 16.3 per cent after the weight management company raised its profit forecast. Valeant Pharma surged 14.8 per cent after the company’s profit beat Wall Street estimates. Emerson Electric fell 2.5 per cent as the factory automation equipment maker’s forecast disappointed investors.

- Additional reporting: Reuters.