Europe: Hopes Britain will reject no-deal Brexit buoy shares

[LONDON] European shares jumped on Wednesday as investors bet British lawmakers would vote to reject a disorderly no-deal Brexit, but underwhelming results from Inditex and Adidas kept gains limited.

The pan-European Stoxx 600 index climbed to close up 0.6 percent while London's FTSE 100 barely managed a 0.1 per cent gain as sterling extended gains.

Lawmakers resoundingly voted against Prime Minister Theresa May's amended Brexit deal late on Tuesday, forcing parliament to decide whether to back a no-deal Brexit or seek a last-minute delay to the process.

"I think the market can see that today parliament is going to vote against no deal," said Duncan Weldon, cross asset allocation strategist at Legal & General Investment.

But investors were far from exuberant.

"I think a lot of people who don't have to be invested in the UK are sitting this one out for the moment", he added.

European stocks were boosted by a 1 per cent jump in oil prices which drove the Stoxx 600 oil & gas index up 1.6 per cent to its highest level in four months.

Results from several companies disappointed, however.

Zara owner Inditex slid 4.5 per cent after it published annual earnings slightly below analysts' expectations and announced more store closures than expected.

"This process of adjusting their store estate is surprising investors and happening faster than people expected," said Alistair Wittet, European equities portfolio manager at Comgest, which holds 11.19 million shares in Inditex and is the 13th biggest investor according to Refinitiv data.

"That naturally weighs somewhat on sales growth in the short term, but I think is the right strategy long term," he added.

Germany's Adidas lost 2.4 per cent after announcing supply chain issues would hit its sales growth in the first half of 2019, particularly in North America.

Wirecard was Europe's worst performer, falling 6.6 per cent after it suspended an accounting employee in Singapore amid allegations of fraud and creative accounting.

"The scope seems to be getting deeper and longer in time than was originally thought," Neil Campling, head of telecoms, media and tech research at Mirabaud Securities' Global Thematic Group, said of the allegations against the German payments firm.

Austria's Verbund lost 6.5 per cent after the hydropower specialist said full-year core profit fell as it produced less electricity in a long dry summer period.

One gainer after results was petroleum storage firm Rubis , up 4.1 per cent after reporting a rise in full-year revenue.

Shares in Norwegian Air dipped 1.5 per cent after it said it would seek compensation from plane maker Boeing for lost revenue and extra costs after grounding its fleet of 737 Max 8 aircraft in the wake of the Ethiopian Airlines crash.

REUTERS