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Europe: Shares end at over three-month low after losing streak

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[MILAN] European shares fell for the eighth straight day on Wednesday, driven downward by signs of a tightening race for the US presidency next week and a drop in AP Moller-Maersk after disappointing results.

The Stoxx 600 index slid 1.1 per cent to its lowest since July 11, undermined later in the session by a sharp drop in oil prices on the back of record build in crude inventories.

The losing streak is the longest one this year.

"Now that it's a bit less certain that (Democratic candidate Hillary Clinton) is going to win, we're seeing the impact of investors finally taking evasive action - probably evasive action which they should have taken a month ago. The caution is setting in," said Ken Odeluga, market analyst at City Index.

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Europe's VSTOXX volatility index reflected this nervous sentiment, hitting its highest level since July.

However, healthcare stocks outperformed, helped by their defensive status but also by signs that Mrs Clinton was losing ground in polls to Republican rival Donald Trump. In the last few weeks investors had been pricing in worries that a Clinton victory could lead to severe regulation on drug pricing.

"Better odds of a Trump win would reduce the probability of a Democratic Senate and/or White House...This lessens the risk of a more severe drug-pricing regime," Morgan Stanley said.

Banking stocks were among the heaviest fallers by sector, dropping 2.4 per cent and extending their losses from the previous session, with Italian lenders and British bank Standard Chartered among the biggest decliners.

Standard Chartered dropped 4.4 per cent, taking its losses combined with the previous session to 9.5 per cent after it reported weak results on Tuesday, with brokers Deutsche Bank and Natixis cutting their target prices for its shares.

Italian lenders Popolare di Milano, Banco Popolare and UniCredit CRDI.MI fell between 5 and 7.7 per cent, hit by talk that Rome could delay a referendum on constitutional changes. The Prime Minister's office denied the speculation.

"A postponement of the referendum would be bad news for Italian equity as it would leave the market stuck with difficult bank recapitalisations, which need political stability to go through," Mediobanca said in a note to clients.

Container shipping firm AP Moller-Maersk slumped 7.2 per cent after its earnings missed forecasts, posting a 44 per cent fall in third-quarter profit.

On the positive side, results boosted shares in a number of companies, including security firm G4S, Danish pharmaceutical Lundbeck and luxury retailer Hugo Boss.


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