European shares little changed; Bayer surges on Trump administration backing

[BENGALURU] European shares struggled to find direction on Tuesday (Dec 2) as caution lingered in the wake of the previous day’s losses, while Bayer rocketed on the US administration’s backing for measures to curb lawsuits related to its Roundup weedkiller.

The pan-European Stoxx 600 ended flat at 575.65, following on Monday’s industrials-driven decline.

Bayer jumped over 12 per cent to a near two-year high after the Trump administration urged the US Supreme Court on Monday to take up the company’s bid to curtail thousands of lawsuits claiming its Roundup weedkiller caused cancer.

The stock helped keep the broader healthcare index afloat, up 0.2 per cent, offsetting losses from Wegovy maker Novo Nordisk, which fell 2.3 per cent.

Banks extended their winning streak to a seventh session, rising 1.1 per cent. Banco Santander’s 1.4 per cent gain was the biggest boost, after it sold a 3.5 per cent stake in subsidiary Santander Bank Polska, which fell 5.8 per cent.

Erste Group rose 3.7 per cent after Barclays upgraded the Vienna-based bank to “overweight” from “equal-weight”, citing positive growth prospects in Central and Eastern Europe.

“The banking sector is both a safe haven and likely to benefit from interest rates remaining high. Spain is often the outlier ... it’s mainly due to the financial sector,” said Nick Saunders, CEO of trading platform Webull UK.

The bank-heavy Spanish IBEX 35 index outperformed peers, closing up 0.5 per cent and near a record high. Germany’s main index was up 0.5 per cent and the French benchmark lost 0.3 per cent.

Defence companies were in focus, with arms makers Rheinmetall and Hensoldt climbing nearly 3 per cent, rebounding from the previous day’s losses.

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Russian President Vladimir Putin met US President Donald Trump’s special envoy Steve Witkoff and his son-in-law Jared Kushner in the Kremlin for talks over a possible end to the war in Ukraine.

Euro zone inflation rises, ECB rate cuts less likely

Investors also assessed fresh data that showed euro zone inflation unexpectedly ticked up last month, likely dashing hopes for further European Central Bank (ECB) rate cuts anytime soon.

“The European Central Bank is not necessarily looking to cut the interest rates. I think that there will be no rate cuts next year because they consider that the policy is in a good place right now,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

European shares outperformed US peers in the first half of the year, as uncertain trade and monetary policy in the US drove investors to diversify abroad.

Wall Street has since caught up, with gains surpassing those of Europe as US markets capitalised on the euphoria around artificial intelligence (AI).

“The elephant in the room is AI stocks... it’s possible that towards the end of the year when volumes are thinner, we may see an increased likelihood of a sharp pullback in the US markets as these are over-valued,” Webull UK’s Saunders said.

Among other stocks, FDJ United slipped 5.7 per cent after JPMorgan downgraded the lottery and online game operator’s stock to “underweight”.

ISS was the biggest loser on Stoxx, falling 7.7 per cent after analysts pointed to speculation over liability in a Hong Kong tower fire. REUTERS