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Europe: Shares end lower on weaker miners and drugmakers
[MILAN] European equities fell on Thursday, dragged down by weaker miners and drugmakers, with investors cutting their exposure to riskier assets ahead of a key speech by Federal Reserve Chair Janet Yellen on Friday.
Although the Fed is seen maintaining rates at its September meeting, expectations have risen that Yellen might indicate a clearer timeframe for the next US rate hike after this week's strong housing data and hawkish comments by other Fed officials.
The pan-European Stoxx 600 index closed 0.8 per cent lower, also weakened by a disappointing sentiment survey in Germany and pulling back from a one-week high hit on Wednesday.
The Ifo economic institute said German business morale deteriorated in August, suggesting company executives in Europe's largest economy have become less optimistic since Britain's vote to leave the European Union.
"In order for stocks to set up the next leg higher, better than expected economic data out of the euro zone will be needed," said Markus Huber, trader at City of London Markets.
Miners lost ground, with the European Basic Resources index falling 1.3 per cent, tracking weaker metals prices. Glencore, down 2.6 per cent, extended its losses from the previous session when it announced a poor set of results.
Pharmaceutical stocks also featured among the top decliners. The Stoxx 600 Helthcare index fell 1.5 per cent, pressured by shares such as Qiagen, BB Biotech and Shire, down 2.4 to 3.6 per cent.
Drugmakers mirrored Wednesday's losses in their US peers which were hit by presidential candidate Hillary Clinton's call on Mylan to drop the price of an allergy treatment drug which has increased in price by more than 400 per cent in the past decade.
European pharma stocks, however, remained weaker despite a recovery in Mylan shares on Thursday after the company said it would reduce the out-of-pocket cost of its severe allergy treatment EpiPen through a discount programme.
Hikma Pharmaceuticals fell 3.5 per cent, the top decliner in Britain's FTSE 100 index, on the top of its 3.3 per cent fall in the previous day when it reported a sharp fall in its core operating profit.
Although the broader market sentiment was gloomy, there were some bright spots. Sunrise Communications jumped nearly 9 per cent after the Swiss telecoms firm posted a fall in core earnings that was narrower than expected and confirmed its guidance.
"The strong second quarter showing by Sunrise in a maturing and competitive market is evidence that its investments in network, distribution and customer service are paying off," analysts at Berenberg said.
Among other sharp gainers, GFK soared 5.9 per cent after German weekly WirtschaftsWoche reported that its majority owner was looking at options including a merger or sale.