Huawei reprieve lifts European shares, Telecom Italia boosts Milan
* Tech sector up as U.S. eases some Huawei restrictions
* Norsk Hydro jumps after Alunorte embargo lifted
* Sonova hits record high after results
* Autos reverse course, now trading lower
(Updates prices, adds quote)
By Agamoni Ghosh and Amy Caren Daniel
May 21 (Reuters) - European shares regained ground on
Tuesday led by the tech sector after the United States
temporarily eased restrictions on China's Huawei.
The pan-European STOXX 600 index was up 0.4% by
0840 GMT, with the trade-sensitive DAX outperforming
after the U.S. Commerce Department said it would allow Huawei
Technologies to purchase American-made goods to
maintain existing networks and provide software updates to
The news came as a relief to markets and lifted European
chipmakers which had tumbled after reports suggested they may
have to halt shipments to the Chinese telecoms tech giant.
"The slight concession on the part of the U.S., is just to
keep channels open to make sure the relationship doesn't sour to
the point where things can no longer continue," said Connor
Campbell analyst at Spreadex in London.
The tech sector rose 1.4% after losing almost 3% on
Monday with chipmakers AMS, STMicroelectronics
and Germany's Infineon climbing between 2% and 6%.
Italy's biggest phone group Telecom Italia topped
the Italian blue chip index after posting first-quarter
earnings in-line with expectations and confirming its guidance
for the next three years.
"Results are broadly in line to slightly ahead, net debt
progress is encouraging, but questions will be asked about rate
of fixed broadband losses," said Berenberg analysts in a note.
The telecoms sector is the only pan-European sub-sector in
the red this year, thus any sign of progress is generally well
received by the market.
UDG Healthcare scaled a more than eight month high
to land on top of the STOXX 600, after the company raised its
2019 adjusted profit forecast.
Norsk Hydro climbed 5% after Brazil gave the
Norwegian metals maker the go ahead for its Alunorte alumina
plant to reopen, while Swiss hearing aid maker Sonova
reported an increase in full-year sales, sending its shares up
Struggling Spanish retailer DIA jumped 5% after
reaching an eleventh-hour agreement to secure financing, staving
off the imminent risk of having to start insolvency proceedings.
Car makers and their suppliers which initially rose
about 1% higher reversed course. Daimler shares were
marginally higher after German newspaper Handelsblatt reported
the company was looking to cut administration costs by 20%.
The banking index, which closed at a more-than
three-month low in the previous session, gained 0.3%, while
defensive stocks including real estate, utilities
and telecoms underperformed.
But investors remained cautious as the sudden about-turn in
China-U.S. talks over the last two weeks shattered confidence in
a speedy resolution to the trade war that has roiled financial
markets for a year.
European equities have outperformed Wall Street since the
tariff war re-intensified on May 9, with the STOXX 600
rising 0.4% but the U.S. benchmark S&P 500 index losing
almost 1% during the same period.
(Reporting by Agamoni Ghosh and Amy Caren Daniel;
Additional reporting by Helen Reid
Editing by Kirsten Donovan/Keith Weir)
First Published: 2019-05-21 09:55:07
Updated 2019-05-21 11:00:16
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