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Europe: Banks give stocks stability, autos driven lower by Fiat

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[LONDON] European shares, stuck just below 21-month highs for more than a week, struggled to gain momentum on Wednesday, with strength in banks and big oil majors offset by weakness in miners and autos.

The pan-European STOXX 600 index ended up 0.1 per cent. Among the national markets, Britain's FTSE 100 rose 0.4 per cent, while Germany's DAX fell 0.1 per cent, weighed down by stocks including Hugo Boss and Evonik going ex-dividend.

Banks were the biggest contributor to gains on the STOXX index with Banco BPM leading the way with a surge of 4 per cent, helped by market talk about the sale of bad loans.

But the sector was weighed down by a 0.9 per cent fall in Deutsche Bank after news that US House Democrats had asked the German lender to provide information on whether any accounts connected to US President Donald Trump have ties to Russia.

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European auto stocks were the biggest sectoral fallers, down 0.6 per cent. They were led lower by a 1.6 per cent fall in Daimler, which extended losses after its sites were searched on Tuesday by German prosecutors in an emissions probe, and a 0.6 per cent fall in Fiat Chrysler .

Shares in the Italian-American carmaker recouped some of their earlier losses after the U.S. government sued it over emissions. "This case is likely to take a long time (VW settled in 16 months) and should weigh on FCA's share price for some time as the message regarding the execution of its 2018 plan is likely to be overwhelmed," analysts at Barclays said in a note.

Among mining stocks, hit by a fall in copper after Moody's downgraded China, a big global metals consumer, Rio Tinto declined 0.5 per cent while Randgold and Fresnillo fell 1.5 and 0.4 per cent respectively.

Glencore lost 0.1 per cent after saying it had made an informal approach to US grains trader Bunge to discuss "a possible consensual business combination". But Bunge responded by saying it was not in talks with the mining and commodities group.

On the positive side, a well-received set of fourth-quarter results from Dixons Carphone lifted its shares 4.7 per cent, while Britvic's first-half update also boosted its shares.

British retailer Kingfisher was the biggest STOXX faller, however, down 7 per cent after a trading update, while engineer Babcock also fell 2.3 per cent after its full-year results.

REUTERS

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