European shares fall as large retail, banking mergers hope dashed

European shares declined on Tuesday as hopes of mega mergers in the worlds of UK retailing and German banking were scuppered.

London-listed supermarket chain Sainbury scrapped its proposed £7.3 billion (€8.5 billion) takeover of Walmart-owned Asda after the deal was blocked by the UK's competition regulator, while Deutsche Bank and Commerzbank announced that they have abandoned tie-up talks that started six weeks ago.

The pan-European Stoxx 600 index finished 0.2 per cent lower as an eight-session rally stalled.

Dublin

The Iseq index of Irish shares dipped almost 1 per cent to 6,392.53. Banking stocks were among the weakest performers, with Bank of Ireland off 3.9 per cent at €5.61 and AIB down 1.1 per cent at €4.06, as sector followers digested the German merger collapse and disappointing earnings from Barclays.

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CRH was also out of sorts, declining by 1.9 per cent to €29.57, as the company's annual general meeting provided little for investors to get excited about. However, Datalex recovered some of the ground lost recently to trade 5 per cent higher to 63 cents.

Aryzta was also in demand for much of the day - soaring by as much as 6.8 per cent - after heavyweight brokerage UBS told clients in a note that there was a chance that the baked goods maker, which has struggled in recent years, may have better-than-expected full year earnings.

“This reflects the first upside risk to consensus in years, after several consensus downgrades,” UBS analyst Joern Iffert. “The new Aryzta management is executing according to plan in our view.”

However, the stock closed down 0.3 per cent, but remained 4.9 per cent higher in Zurich, where it was more actively traded.

London

UK shares closed in the red as Taylor Wimpey's warning on margins triggered a sell-off among housebuilders while investors soured on Sainsbury's, which slumped 4.7 per cent, after the company scrapped its proposed takeover of Walmart's Asda.

The FTSE 100 and the FTSE 250 lost 0.6 per cent each.

Shares of rivals Tesco, Morrisons and Ocado were down between 1.2 per cent and 1.7 per cent.

Taylor Wimpey shed 5.4 per cent on its worst day in more than five months after it warned full-year margins would be slightly lower than last year as it cost more to build homes.

Fellow blue-chip housebuilders slipped after the update from Britain's third-largest homebuilder. Persimmon fell 2.6 per cent, Barratt gave up 2.4 per cent and Berkeley lost 1.6 per cent.

Barclays' first-quarter profits fell 10 per cent as tough market conditions led to lower earnings at its under-pressure investment bank, sending shares down 3.6 per cent on their worst day since November.

Europe

Finnish telecom network equipment Nokia slid 9 per cent and logging its sharpest decline in 18 months, after reporting a surprise quarterly loss.

Switzerland's biggest bank UBS advanced after its first-quarter results surpassed analyst expectations, a day after smaller rival Credit Suisse also posted strong results.

Meanwhile, wind energy producer Iberdrola's 4.3 per cent jump after it raised its 2019 guidance for net profit and dividend growth, helped Spanish stocks outperform.

In the wake of the failed merger talks between Deutsche Bank and Commerzbank, a deal that had faced fierce opposition from the workforce, Deutsche shares dipped 1.5 per cent while Commerzbank slipped 2.3 per cent.

New York

US stocks were pulled lower on Thursday by downbeat earnings from industrial companies, including 3M, although strong results from marquee names Facebook and Microsoft kept the tech-heavy Nasdaq afloat.

3M Co shares tumbled after the Post-It notes maker reported a lower-than-expected quarterly profit, cut its 2019 earnings forecast and said it would lay off 2,000 workers globally.

On the other hand, Facebook jumped after the social media giant's quarterly profit blew past analysts' profit estimates.

Microsoft rose, briefly crossing $1 trillion in market value, after the software giant beat estimates for quarterly results and predicted continued growth for its cloud computing business. – Additional reporting, Reuters, Bloomberg