Europe: Shares dip as Paddy Power, PostNL losses outweigh strong miners

[LONDON] Declines in shares of PostNL, Paddy Power Betfair and health companies outweighed strong basic resources and energy stocks on Monday, sending European shares down after robust gains in the previous session.

The pan-European Stoxx 600 index ended 0.1 per cent lower, having enjoyed its strongest day in three weeks on Friday as the euro fell, helping US dollar-earning firms make gains.

Euro zone blue chips also slipped 0.1 per cent, while Germany's DAX fell 0.3 per cent and British stocks climbed 0.3 per cent.

Some investors warned the full impact of a stronger euro on European equities could be yet to come.

"The euro is likely to have an impact in the third quarter, with a 10 per cent appreciation of the euro lowering earnings per share by around 5 per cent," said Valentin Bissat, senior strategist at Mirabaud Asset Management.

Among the day's biggest movers, PostNL fell 5.1 per cent after the Dutch postal company said full-year profits would come in at the lower end of expectations due to regulatory changes.

Gambling firm Paddy Power Betfair lost more than 5.2 per cent after the company said CEO Breon Corcoran would step down, though it named a new CEO to succeed him.

At the sector level, falls in defensive healthcare stocks were the biggest negative, while miners provided the strongest support for benchmark indexes, up 1.7 per cent as copper and iron ore prices climbed.

ArcelorMittal, Anglo American, Rio Tinto and Glencore were among top European gainers, up between 2.3 and 4.7 per cent.

Energy stocks were 0.1 per cent higher.

Of the two-thirds of MSCI Europe companies which have reported quarterly results, 61 per cent have either met or beaten expectations, according to Thomson Reuters data.

Energy companies have seen the strongest results so far, with 82 per cent beating analyst estimates, while only 41 per cent of industrials have beaten expectations.

"We are seeing big rebounds in energy and materials," said Alex Dryden, global market strategist at JP Morgan Asset Management.

"On a year-on-year basis we have seen some stabilisation in commodities, which is really a base effect because of the weakness of 2016.

"I don't see huge upside in this commodities rally, but I acknowledge the strength of the numbers coming out of this space," Mr Dryden added.

Banco BPM jumped 2.5 per cent, among the top-gaining euro zone banks, after the Italian lender agreed the sale of its asset manager Aletti to Anima for US$1.3 billion.

REUTERS