European shares rise despite worries over Catalonia crisis

European shares rose for the fourth consecutive week on Friday as confidence over the region's economic recovery outweighed worries over the Catalonia crisis, whose impact remained confined to Spanish equities.

While Spain’s IBEX ended a tumultuous week down 1.9 per cent after a banned referendum last weekend in the wealthy Spanish region overwhelmingly backed independence, the pan-European STOXX 600 index fell 0.4 per cent on the day but posted a five-day gain of 0.3 per cent.

Redemptions in Spanish stock funds hit their highest level in nearly three years over the past week as investors became alarmed by the confrontation between Madrid and Catalonia, EPFR Global data showed. But flows into European equity funds exceeded $1 billion for the third week running as the region’s economic recovery retained its momentum, EPFR added.

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The Iseq underperformed its European peers, dropping 45 points to 6,859. Shares in building materials company CRH fell by 1.8 per cent to €30.91 after its offer for US Ash Grove Cement was surpassed. Ash Grove confirmed that it received a competing proposal to acquire the group at an indicated enterprise value of up to $3.8bn, which was later reported to be CRH rival Summit Materials.

Elsewhere Ryanair fell nearly 3 per cent to €16.50 despite conciliatory comments from boss Michael O'Leary in the company's ongoing wrangle with pilots. The negative was linked to a negative broker's note related to rival EasyJet, which soured sentiment in the airline sector.

It was a positive session for Irish food groups Kerry and Origin and London-listed Greencore, which all outperformed their relative indexes on the back of positives for the food sector in general.

LONDON

British shares edged higher on Friday and held to their highest level in two months as political uncertainties linked to Theresa's May's premiership pushed the pound lower, giving a boost to dollar-earning groups such as pharma stocks. The FTSE 100 index closed 0.2 per cent up at 7,522.87 points, with Britain's pound on track for its worst week in a year as the prime minister hit back at a plot to topple her, saying she would provide "calm leadership" to the country. Health stocks, which source a sizeable chunk of their revenue from the United States, were among the biggest gainers. Heavyweights GlaxoSmithKline and AstraZeneca rose by about 0.3 per cent and 1 per cent respectively. British American Tobacco was up 1.6 percent and Imperial Brands advanced by 0.2 percent. Shares in budget airline easyJet dropped by 1.6 per cent, the biggest

FTSE 100 faller, after a price target cut from broker Credit Suisse.

EUROPE

Shares in Catalonia-headquartered Caixabank and Banco Sabadell fell 0.6 and 1.9 per cent respectively following a strong rally in the previous session on news they were looking to move their bases out of Barcelona.

Sabadell and Caixa have the biggest exposure among top Spanish banks to private sector loans in the wealthy Catalonia region, while Santander, up 0.1 per cent, and Unicaja , down 0.3 per cent, have the lowest.

Despite the Catalan crisis both stocks remain among the top-performing euro zone banks, up over 20 per cent year-to-date. Italian banks continued to suffer from plans by the European Central Bank to ask lenders to set aside more cash to cover newly classified bad loans. Italian banks, along with Greek ones, are seen as particularly exposed to the measures because of the slowness of their countries' legal systems. Top Italian bank fallers were Credito Valtellinese and UBI, all down more than 3 per cent.

NEW YORK

Wall Street was lower on Friday as declines in Costco and energy shares added to the dour mood set by a report that showed the first drop in US jobs in seven years. The Labor Department's closely watched employment report showed nonfarm payrolls fell by 33,000 in September as Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring.

However, a bright spot was the better-than-expected rise in average wages, up 0.5 per cent, compared with a 0.3 per cent increase estimated by economists polled by Thomson Reuters.

The S&P 500 had marked its sixth straight record closing high on Thursday, in large part due to gains in the technology index. However, on Friday the index fell 0.2 per cent, dragged down by losses in Apple and Microsoft. Shares of Costco dropped to their lowest in nearly a month after the warehouse club retailer reported a fall in gross margins. The stock was the biggest drag on the S&P 500 and the Nasdaq.

Energy declined 0.9 per cent as oil prices looked set to end a multi-week bull run amid a bout of profit taking and the return of oversupply worries.

– Reuters/Bloomberg