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Europe: London stocks drag shares lower as Glencore, oil stocks weigh

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European equities declined on Thursday as London stocks were sapped after Glencore scrapped its dividend and oil stocks slid, while investors kept a close eye on Washington for progress on US stimulus.

[BENGALURU] European equities declined on Thursday as London stocks were sapped after Glencore scrapped its dividend and oil stocks slid, while investors kept a close eye on Washington for progress on US stimulus.

The pan-European STOXX 600 index closed 0.7 per cent lower, with London's FTSE 100 falling 1.3 per cent and the German DAX down 0.5 per cent.

Europe's mining index, which rallied earlier this week, shed 2.5 per cent after Glencore became the first major mining company to scrap its dividend and said that it would prioritise cutting debt.

Its shares slumped 8.1 per cent, while energy majors BP, Royal Dutch Shell and Total fell between 2 per cent and 3.8 per cent after strong gains on Wednesday.

Wall Street indexes were largely flat, stalling near record levels as US Democrats and White House officials struggled to work out a stimulus package for the coronavirus pandemic-stricken economy.

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"Progress has been made but doubts are creeping if a deal will be reached before another week passes," Edward Moya, a senior market analyst at Oanda wrote in a note.

London's exporter-heavy FTSE 100 also took a hit from a stronger pound after the Bank of England (BoE) saw no immediate case to cut interest rates below zero even as it said the economy would take longer to recover from its Covid-19 slump than it previously forecast.

"This is another positive signal at a time of still considerable uncertainty," said Chris Bailey, European strategist at Raymond James. "Conditions are still extremely difficult, and subject to negative revision, but today they have seen a chink of light."

German stocks posted relatively small losses as engineering group Siemens rose 1.6 per cent after forecasting a modest improvement in orders and revenue in the months ahead.

Adidas gained 1.9 per cent as it expects a rebound in profits in the third quarter.

Among the fallers, French insurer AXA slid 3.5 per cent after it dropped its 2020 earnings target and said it would not make additional payouts to shareholders in the fourth quarter.

UniCredit was down 3.9 per cent as it vowed to stay out of a possible merger wave in Italy after reporting higher than forecast quarterly results.

Lufthansa slipped 1.2 per cent after saying it did not expect air travel demand to return to pre-crisis levels before 2024.

Of the 65 per cent of the Stoxx 600 companies that have reported results so far, nearly 60 per cent have exceeded dramatically lowered estimates, Refinitiv Eikon data shows.

REUTERS

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