Europe: Stocks end lower as heavyweight resource players weigh

[BENGALURU] European shares fell on Tuesday, hurt by losses in British blue chips, while mixed economic data and continued growth in novel coronavirus cases cut short optimism over a possible Covid-19 treatment.

The pan-European STOXX 600 index closed down 0.3 per cent as Monday's gains ran out of steam, putting the benchmark comfortably within its trading range since mid-May.

It had gained on Monday after the United States authorised the use of blood plasma from patients who have recovered from Covid-19 as a treatment.

Heavyweight British resource stocks were among the biggest drags on the index, due to strength in the pound weighing on their export margins.

The STOXX 600 is still some 15 per cent off a pre-pandemic record high, as a recovery from March lows stalled in the face of resurgent Covid-19 cases and sluggish economic growth. Data last week had shown business activity faltering in the region.

"Although we expect the Euro area economy to recover rapidly from the downturn, the scale of the output decline raises the risk of long-lasting 'scars' to the economy's productive capacity," Goldman Sachs analysts wrote in a note.

Markets had initially gained as top US and Chinese trade officials reaffirmed their commitment to the Phase One trade deal despite diplomatic rifts between the two countries.

The trade-sensitive German DAX closed flat after data showed Europe's largest economy contracted by a record 9.7 per cent in the second quarter, but marked a minor upward revision from an earlier estimate of minus 10.1 per cent.

Other data showed German business morale improved more than expected in August.

An unexpected drop in US consumer confidence also weighed, as it pointed to a likely stalling in the world's largest economy.

Among individual movers, shares of AstraZeneca rose 0.2 per cent after the British drugmaker said it had started testing an antibody-based cocktail for the prevention and treatment of Covid-19.

Technology stocks were among the biggest gainers on the day. Aveva Group rose 7.2 per cent after announcing a deal to buy OSIsoft, a privately held maker of industrial software, for an enterprise value of US$5 billion.

LVMH gained 0.9 per cent after a source told Reuters the French luxury goods giant and US jewellery chain Tiffany will give themselves another three months to complete their US$16.2 billion tie-up.

SAS jumped 10.1 per cent after the airline said it was expecting to complete a 14 billion Swedish crown (S$2.19 billion) recapitalisation plan to counter the effects of the pandemic by November.

REUTERS