German losses keep European shares flat as govt talks collapse

[MILAN] Germany's main share index fell on Monday after the collapse of government coalition talks, weighing on the broader European market which has already spent two straight weeks in the red.

While Germany's DAX benchmark fell 0.2 per cent, gains in pharma heavyweight Roche after positive trial news, along with dealmaking talk in the utilities sector kept the pan-European Stoxx 600 index flat.

Roche rose 3.7 per cent after the Swiss-based drugmaker announced a double dose of trial wins. The firm said its immunotherapy Tecentriq, mixed with other drugs, made advances against lung cancer, while data suggested its haemophilia agent Hemlibra could be used by more patients.

"Roche has delivered a best case scenario... given degrees of market scepticism around both these studies," Jefferies analysts said in a note. Roche shares were on track for their biggest one-day gain since early March.

Among other top gainers on the Stoxx on Monday was RWE , up 4.1 per cent, after Reuters quoted sources as saying the German utility was looking at ways to cut its 16.8-billion euro (S$26.86 billion) stake in retail business Innogy, in what could involve a deal with Italy's Enel.

Innogy shares firmed 1.2 per cent, while Enel slipped 0.5 per cent.

Altice rose 7.8 per cent after the telecoms and cable company said it was not preparing to raise cash through any equity issue, adding it had no margin loans problems and was working on an asset sale programme to cut its debt.

Among top fallers were Elior, down 4.5 per cent, as brokers slashed their price targets following a disappointing update on Friday from Europe's third-largest catering group.

NEX Group was down 3.9 per cent. The British financial technology company reported a drop in first-half trading operating profit and said market conditions remained challenging due to a lack of volume and volatility.

The Stoxx 600 benchmark is down 2.8 per cent so far in November as investors have been locking in profits following a strong run so far this year.

Germany's political crisis is also weighing. Chancellor Angela Merkel said on Monday her efforts to form a three-way coalition government had failed, pushing Europe's largest economy closer to a possible new election.

The re-emergence of political risk could put more pressure on equities but some investors remain upbeat, heartened by solid economic activity.

"The recent weakness offers an attractive investment opportunity in European stocks," Credit Suisse said in its investment daily.

REUTERS