European shares muted at start of holiday-shortened week

EUROPEAN shares were little changed on Monday, with beverage stocks weighing on the index, as investors navigated a holiday-shortened week on a tepid note after a record close in the previous session.

The pan-European Stoxx 600 ended down 0.13 per cent at 586.75. Major regional bourses were also lower, with London and France down 0.3 per cent and 0.4 per cent, respectively.

The Stoxx 600 gained more than 1 per cent last week after a slowdown in US consumer price inflation bolstered expectations for additional Federal Reserve interest rate cuts, while the European Central Bank maintained its current policy rates and took a more positive view of the euro zone economy.

Analysts expect some volatility in markets, driven by low liquidity heading into a holiday-shortened trading week.

“I think what we’re seeing is a year-end positioning out of consumer, noncyclicals and also utilities and healthcare ... and there seems to be a repatriation of funds going on into technology but in the US,” said Axel Rudolph, senior financial analyst at IG.

“Everybody seems to be focusing now on the festive period. There’s far less liquidity, there’s less volume trade.”

Most sectors retreated following the robust gains on Friday, with the food and beverages category dropping the most. Shares of Diageo, the world’s largest spirits group, fell 3.7 per cent while those of French spirits maker Pernod Ricard and Stella Artois owner Anheuser-Busch InBev were down 2.9 per cent and 2.5 per cent, respectively.

China’s commerce ministry has imposed anti-dumping measures on imports from the European Union, further straining tensions between Beijing and the bloc. The EU has imposed tariffs on China-made electric vehicles.

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Commodity-linked sectors traded higher, with miners up almost 1 per cent after gold prices raced past US$4,400 per ounce for the first time and copper prices set a record high.

Shares of banks, which largely drove last week’s gains, were little changed. The sector is up more than 65 per cent on a year-to-date basis - it is one of the market’s strongest performers - with analysts pointing to a pickup in merger-and-acquisition activity, lighter regulatory backdrop, and relatively stable economic environment.

The defence and aerospace sector retreated 0.4 per cent after rising more than 3 per cent in the previous two sessions. “We anticipate positive macroeconomic momentum in the euro zone will persist, and corporate profit growth to pick up... we particularly like banks, utilities, industrials, technology and Germany,” UBS Global Wealth Management analysts said.

Shares of oil firms gained 0.3 per cent, tracking a rise in crude prices.

The Stoxx 600 index is poised to deliver its strongest annual performance since 2021, benefiting from declining interest rates and global investors diversifying their portfolios away from premium-valued US technology stocks.

On the radar will be a US GDP reading this week, one of the final economic indicators before the end of the year.

Among stocks, Abivax jumped 15 per cent after media reports of renewed chatter of US pharmaceutical giant Eli Lilly attempting a takeover.

Orsted fell more than 12 per cent after the Trump administration suspended leases for five large-scale offshore wind projects under national security concerns. The Danish energy firm owned two of the affected projects. REUTERS