Europe: Stocks end below record high as mining losses offset tech rally

[BENGALURU] European stocks closed flat on Tuesday, as a billion-dollar German property deal and a rally in technology shares were offset by losses in major mining stocks due to concerns over Chinese markets.

The pan-European Stoxx 600 index ended largely unchanged at 445.20 points, after hitting a record high of 447.15 earlier in the day.

Germany's DAX rose 0.2 per cent, having hit a record high earlier in the day on news that Europe's largest residential property group Vonovia agreed to take over its rival Deutsche Wohnen for about 18 billion euros (S$29.23 billion).

Deutsche Wohnen surged 15.7 per cent, the most on the Stoxx 600, while Vonovia fell 6.1 per cent. Europe's wider real estate index added 0.4 per cent, briefly touching a one-year high.

Technology stocks rallied 1.3 per cent after their Wall Street peers climbed overnight on fresh insistence from US Federal Reserve officials that loose policy would stay.

A lessening of inflation fears saw euro zone government bond yields edge down for the third day in a row.

"In the last couple of days, bond yields have come down a little bit and that has allowed equity markets to breathe again," said Roland Kayolan, European equity strategist at Societe Generale.

"We're still in a phase where economies are reopening gradually in Europe and we should see better leading indicators in the coming months."

Miners lagged their European peers with a 1.7 per cent loss, as China said it would strengthen price controls of key commodities after warning against hoarding and speculation to cool a blistering rally in prices of industrial commodities.

Investors weighed data that showed the German economy shrank more than expected in the first quarter against improving business morale in May, with companies turning more upbeat in the light of falling coronavirus infections and steps towards reopening.

Europe's Stoxx 600 is up about 12 per cent so far this year, largely in line with Wall Street's S&P 500 as reopening optimism lifted shares of economically sensitive sectors such as financials and energy.

HeidelbergCement gained 0.2 per cent after US construction materials supplier Martin Marietta Materials said it would buy the German company's assets in California and Arizona for US$2.3 billion.

British rail operator Trainline fell 8.3 per cent, the most on the Stoxx 600, after Stifel downgraded the stock, citing uncertainty to the firm's activities after the British government formed a new railway operator last week.

REUTERS