European stocks slip as Britain’s FTSE powers ahead on weaker pound

Sterling weakens on comments by May on post-Brexit trade

European shares slipped on Monday as a pullback in bank stocks more than offset a stronger tech sector, while a drop in the pound drove Britain’s FTSE 100 index to further record highs. The pan-European Stoxx index slid 0.4 per cent, while the FTSE 100 rose 0.4 per cent after hitting an all-time high of 7,243.76 points in its 10th straight session of gains.

The pound sank to more than two-month lows after weekend comments from British prime minister Theresa May sparked talk that Britain would drastically rework trade relations with the European Union after Brexit.

"Domestic populist politics trumps the trade card for now, it seems, and that is weighing on the pound, whilst simultaneously giving another boost to the FTSE 100," Neil Wilson, a senior market analyst at ETX Capital, said in a note.

DUBLIN The Iseq was marginally down at 6,574, roughly tracking movements elsewhere in Europe. Tullow Oil ended the day flat at €3.83 after being down 3.5 per cent at one stage, following the news that it had agreed to sell a stake in a Ugandan oil project for €851 million to French group Total. The group's shares rose 2.7 per cent in London, to £3.336.


Bank of Ireland was down 2 per cent at 24.8 cents amid a wider downturn in European financials. Ryanair was also weaker, trading down 1 per cent at €14.62 after a strong week last week. Building materials giant CRH also tracked the weaker global trend to end the day down marginally at €32.05.

In contrast, food firms Glanbia and Kerry traded up 2.3 per cent and 1.7 per cent respectively at €16.28 and €69.29, albeit on thin trading volumes.

LONDON Britain's blue-chip index broke fresh records on Monday, pushed up by rallying resource stocks and a weak sterling. The FTSE 100 touched a new record high of 7,243.76 points, then settled at 7,237.77 points, up 0.4 per cent, for the close. It chalked up its 10th straight daily session of gains.

The index tends to gain as sterling drops, due to a large number of dollar-earning constituents. The pound slid more than 1 per cent to a ten-week low against the dollar after comments over the weekend from Theresa May reignited fears of a “hard Brexit”. Strong performance in basic resources and consumer stocks also underpinned the index.

Glencore, Randgold Resources and BHP Billiton were among the top gainers as gold and silver prices rebounded. Glencore led the FTSE, closing up 3.6 per cent, supported by a note by Barclays reiterating its "overweight" rating and increasing its target price on the stock. Cigarette sellers British American Tobacco and Imperial Brands were third and fourth top gainers, leading the consumer goods sector higher. Outsourcing company Capita was the top faller, followed by Land Securities Group and Royal Bank of Scotland which, along with the vast majority of European banks, tracked lower.

EUROPE Germany's Fresenius Medical fell 6.8 per cent, making it the biggest loser on the pan-European Stoxx index, after it and US rival DaVita received subpoenas from federal prosecutors investigating their ties with a charity that helps patients pay for kidney dialysis.

Among the biggest weights to the Stoxx were also oil majors Royal Dutch Shell and Total. Oil prices fell sharply as signs that growing US production and record Iraqi exports had raised concerns that additional output would weigh on the market.

Among top gainers, French retailer Casino Guichard rose 3 per cent after an upgrade from Bank of America Merrill Lynch, citing a simplification of the group's corporate structure as a positive for the stock.

Tech stocks rose 0.7 per cent after an upbeat note from Citi, which expects the sector to have another bright year, citing appealing fundamentals and earnings prospects. SAP rose 0.8 per cent to a fresh 22-year high after UBS said a survey of customers of the German software maker suggested that the company had room to lift its mid-term goals when it reports results late this month. German car-maker Volkswagen rose 4.9 per cent with traders citing hopes a deal to resolve the US diesel emissions scandal could be close.

NEW YORK Declines in bank and energy companies weighed on Wall Street, distancing the Dow from the 20,000 mark, while gains in technology stocks pushed the Nasdaq to a record intraday high. Two-thirds of the 30 Dow components were lower, with Goldman Sachs's 0.7 per cent decline weighing the most. P&G and Coca-Cola dropped 0.9 per cent after Goldman downgraded both the consumer staple stocks.

Apple, which is celebrating the 10th anniversary of the iPhone, was up 1.1 per cent at $119.14, after hitting a 13-month high of $119.30. A string of multibillion dollar healthcare deals boost the sector on Monday. Ariad Pharma surged nearly 73 per cent on a $5.2 billion takeout by Japan's Takeda. Pet hospital operator VCA jumped 28 per cent after Mars said it would buy the company for $7.7 billion. – (Additional reporting by Reuters/Bloomberg)

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times