Europe: Oil drop hits stocks, Deutsche Bank offsets losses

[LONDON] European shares fell on Monday, led lower by commodity stocks as an upbeat update from Deutsche Bank and expectations of a strong earnings season kept a lid on losses.

The pan-European Stoxx 600 index fell 0.3 per cent, with the energy sector the biggest drag as crude prices fell sharply as concerns about supply disruptions eased.

Basic resources and autos were also lower as data from key commodity consumer China showed economic growth slowed in the second quarter amid growing worries over a trade war with Washington.

On the plus side, second-quarter earnings for the Stoxx 600 are expected to grow 8.1 per cent year-on-year, an improvement on the first quarter.

"Earnings results will likely be strong," wrote JP Morgan strategist Mislav Matejka in a note.

"...The guidances are the unknown, but we note that trade headlines might be losing some of the shock value as many investors now expect further bad news on this front."

Results drove some of Europe's biggest movers.

Deutsche Bank shares jumped 7.3 per cent to a six-week high after the German lender reported preliminary second-quarter results above consensus with a better-than-expected capital buffer.

Worries over the bank's solvency have cratered its shares, down 36 per cent year-to-date. Its gains on Monday helped lift the banking sector index 0.3 per cent.

In other earnings-driven moves, fish farmer Marine Harvest fell 1.1 per cent after it reported lower second-quarter earnings and harvest volumes below its guidance.

Drugmaker Indivior surged 16.9 per cent after a US court blocked India's Dr. Reddy's Laboratories from selling generic versions of its bestselling opioid addiction treatment in the United States.

Kone rose 1.3 per cent after a report that the Finnish elevator firm and Germany's Thyssenkrupp had held merger talks. Thyssenkrupp was down 0.1 per cent.

French technology consultancy firm Altran edged up 0.6 per cent after Friday's 30 per cent plunge on the discovery of forged orders at its recently acquired US business Aricent.

REUTERS