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European shares trim best week in two months as automakers slide
[FRANKFURT] European stocks snapped a five-day winning streak, trimming their weekly gain, as automakers led the Stoxx Europe 600 Index lower.
Volkswagen AG slid 2.3 per cent after data from the European Automobile Manufacturers' Association showed its share of the European market contracted to a five-year low. Daimler AG dropped 2.1 per cent. Energy producers tumbled as oil fell for a third day before major suppliers meet in Doha to discuss an output freeze. Miners declined for a second day, led by Anglo American Plc as industrial metals slipped.
The Stoxx 600 fell 0.4 per cent to 342.69 at 4:30 pm in London, paring its weekly advance to 3.3 per cent. The equity benchmark capped a fifth day of gains yesterday, rising to within a point of a two-month high, as Nestle SA climbed after sales beat forecasts. Investors are assessing earnings reports for clues on corporate health, with analysts predicting profit at Stoxx 600 companies will shrink in 2016, reversing earlier calls for growth. Gains this week have pushed the index's valuation to about 15.7 times estimated profit, which is almost 20 per cent above the average multiple for the past five years.
"The week has been pretty good and markets are catching a break today," said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. "Earnings are looking OK and I don't expect a huge rally from here, but step by step, we will climb up the wall of worries and go higher. The biggest concern is if earnings next week come lower than expectations - it could change the market mood."
Greece's ASE Index posted the best performance of western- European markets today, with Piraeus Bank SA leading a surge in domestic lenders after the European Central Bank said some of their bonds are eligible to be bought under its quantitative- easing program.
European stocks, which hit their highest levels ever a year ago, are now struggling for fresh impetus after rebounding as much as 14 per cent from a Feb 11 low. The Stoxx 600 has traded in a tight range in the past month amid renewed concern over the prospects for global growth and is down 6.3 per cent since the start of the year.
Among other stocks moving on corporate news, Anheuser-Busch InBev NV supported food-and-beverage companies, rising 1.6 per cent after agreeing to create a fund that will support the South African beer industry and protect jobs in the country to help seal approval for its proposed takeover of SABMiller Plc, which added 1.5 per cent.
Carrefour SA advanced 3.9 per cent after France's largest retailer reported higher first-quarter revenue as growth in southern Europe and Latin America compensated for a drop in China.