Europe: Shares nudge up, earnings a mixed bag

[BENGALURU] European shares struggled to make headway on Wednesday as investor concerns about a further delay to Britain's departure from the EU offset gains for London's exporter-heavy FTSE 100 from a weaker pound and some decent corporate earnings.

The pan-European Stoxx 600 index closed just 0.1 per cent higher, with technology stocks among the biggest drags after a sales warning from US chipmaker Texas Instruments hit its European peers.

Shares in Infineon, Dialog and STMicroelectronics fell between 0.4 per cent and 2.8 per cent after the sector proxy forecast a 10-17 per cent drop in current-quarter revenue.

Mining stocks jumped 1 per cent, lifted by a smaller-than-expected drop in quarterly profit at aluminum producer Norsk Hydro.

The Peugeot and Citroen manufacturer PSA Group gained 3.2 per cent after reporting a rise in third-quarter revenue on strong demand for its pricier SUV models.

"Broadly, I would say results are probably mixed. No dramatic trends," said Niall Gallagher, investment director at GAM.

As well as Peugeot, Gallagher highlighted positive earnings updates from Louis Vuitton owner LVMH and semiconductor equipment maker ASML last week as encouraging signs.

"They're evidence that growth remains fairly attractive," he added.

London's blue-chip FTSE 100 gained 0.7 per cent as exporters on the index got a boost from a weaker pound after Prime Minister Boris Johnson's Brexit deal hit a new snag. FTSE midcap stocks closed flat.

Britain's parliament rejected Johnson's tight timetable to legislate on the agreement before a Oct 31 deadline, leaving EU leaders to consider whether to grant Britain a further three-month Brexit extension.

European stock markets have been rattled in the past few months by geopolitical concerns, a prolonged US-China trade war and a manufacturing recession in Germany, the bloc's biggest economy.

After a solid 12 per cent gain in the first quarter, the Stoxx 600 index lost steam, adding 1.5 per cent in Q2 and 2 per cent in Q3. It is up 0.3 per cent since the start of October.

Analysts expect a drop of as much as 5.3 per cent in third-quarter corporate profits, worse than the 3.7 per cent fall expected a week ago, according to IBES data from Refinitiv.

Heineken shares lost 3.1 per cent after the world's second largest brewer said operating profit this year would be at the lower end of its previous forecast.

Shares in Swedbank fell 4.5 per cent after it reported a bigger-than-expected drop in quarterly earnings, while shares in Germany's Carl Zeiss Meditec tumbled 8.8 per cent after its full-year EBIT margin fell short of its latest guidance.

Among the stronger performers, Danish jewellery maker Pandora jumped 16 per cent, with traders pointing to an upgrade to "hold" by brokerage Carnegie.

Swiss engineering firm ABB gained 3.5 per cent after its third-quarter profit fell by less than expected, even as it warned that conditions were weakening in the United States and China, its two biggest markets.

REUTERS