European stocks shrug off trade worries as oil stocks rally
* STOXX 600 up 0.5 pct, DAX up 0.6 pct
* Galapagos jumps on positive drug trial
* UBS upgrade to "neutral" boosts Barry Callebaut
* Ferragamo gains on takeover talk, denies M&A rumours
(Adds details, closing prices)
By Helen Reid
LONDON, Sept 12 (Reuters) - European shares rose on
Wednesday as oil and mining stocks rallied and investors
shrugged off worries over trade tensions between the United
States and China.
The pan-European STOXX 600 rose 0.5 percent, even
though Asian stocks fell after President Donald Trump said the
United States was taking a "tough stance" with China on trade.
Oil stocks rose 1.6 percent after Brent prices
reached $80 a barrel following a drop in U.S. crude inventories
and as sanctions on Iran added to concerns over global supply.
Mining shares climbed 1.3 percent.
"We think it is likely that the equity market sell-off,
particularly in the European time zone, will slow down or even
temporarily reverse," said RBC strategists.
"While 'trade frictions' and a perception of slowing Asian
markets as a result are easy culprits, there seems to be a lot
of risk priced in at this stage too," they said.
Dutch biotech firm Galapagos soared 17.6 percent
to the top of the STOXX after positive trial results for a drug
to treat rheumatoid arthritis.
Zara owner Inditex rose 4.1 percent after the
fashion retailer said it expected profit margin growth in the
Salvatore Ferragamo gained 4.1 percent, with
traders citing rumours of a possible takeover. The family that
controls the fashion group is not interested in selling its
stake, a spokeswoman for the group said.
Hermes shares rose 4 percent after the French
handbag maker reported record first-half margins.
"Hermes delivered a solid set of results... Importantly, the
company noted a positive contribution to profits from strong
demand in China," Berenberg analysts wrote.
British energy provider SSE sank 8.3 percent after
it warned first-half profit would halve compared with last year,
calling its financial performance "disappointing and
Fiat Chrysler rose 4.4 percent after Bloomberg
reported that the car maker is seeking more than 6 billion euros
for its unit Magneti Marelli from KKR.
Cigarette makers BAT and Imperial Brands
were up 5.8 and 3.2 percent respectively after the U.S. Food and
Drug Administration said it was considering a ban on flavoured
The FDA's leader announced a number of steps the agency
planned to take as part of a broader crackdown on the sale and
marketing of e-cigarettes to children.
Traders said the action was not as harsh as expected.
Elsewhere broker research moved some stocks. German utility
E.ON fell 3.5 percent after Morgan Stanley analysts
cut their target price on the stock.
Swiss chocolate maker Barry Callebaut gained 6.9
percent as UBS upgraded the stock to "neutral" from "sell".
"We undertook some supply chain checks and think Barry could
sign new contracts soon, benefiting its volume growth in the
next 12-18 months," analysts at the Swiss bank wrote.
Overall, however, analysts are lowering earnings outlooks
for MSCI Europe companies, as the second-quarter earnings season
ends and investor attention turns to political risk.
(Reporting by Helen Reid and Danilo Masoni, editing by Larry
King and David Stamp)
First Published: 2018-09-12 09:38:18
Updated 2018-09-12 19:00:32
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