Europe: Shares gain, led by retailers, financials; FTSE lags

[LONDON] European shares rose on Wednesday, reaching their highest level in more than two weeks as retail stocks and financials gained, although Britain's FTSE was hurt by a jump in sterling after reports of a breakthrough in Brexit talks.

The pan-European Stoxx 600 ended the session with a 0.3 per cent gain. Euro zone blue chips rose 0.2 per cent.

Financials contributed the most to gains, with Lloyds, Santander and Barclays rising 1.8 per cent to 3.6 per cent.

Britain's FTSE 100 dropped 0.9 per cent as sterling climbed to a two-month high against the dollar.

Britain has offered to pay much of what the European Union was demanding to settle a Brexit "divorce bill", bringing them close to agreement on a key obstacle to opening talks on a future free trade pact, EU sources said on Tuesday.

Shares in internationally exposed FTSE companies such as British American Tobacco, Diageo and GlaxoSmithKline were down more than 2 per cent.

"With the chance of a soft Brexit rising, the global upturn can now begin to rub off on the UK more," Kallum Pickering, senior UK economist at Berenberg, said in a note.

On the Stoxx 600, Ocado led gains, jumping 16.2 per cent and taking gains over the past two days to around 40 per cent, after French supermarket Groupe Casino agreed to use Ocado's e-commerce platform on Tuesday.

Casino shares gained a further 3.7 per cent on Wednesday.

Morgan Stanley reiterated its "overweight" rating on Ocado and said that they "remain buyers".

Tech stocks declined the most. Chipmakers STMicroelectronics, AMS, Infineon and Dialog Semiconductor lost 3.6 per cent to 7.3 per cent.

European tech stocks saw losses accelerate towards the end of the session, shrugging off a positive earnings update from US peer Marvell Technology as investors in the US shunned big tech in favour of financials.

European tech has surged 21 per cent this year, set to end the year as the region's best-performing sector.

The sector was hit earlier this week after Morgan Stanley downgraded Samsung Electronics on worries a memory- chip boom could peak soon.

Broader market sentiment was also lifted by signs of progress on US tax cuts, which offset caution following another missile test by North Korea.

The Stoxx 600 is still set to end November with a loss, having fallen nearly 2 per cent so far this month as investors take profits and earnings growth slows compared with the previous two quarters.

REUTERS