Europe: Shares rise amid Brexit tussle as focus shifts to earnings

[BENGALURU] European shares broke a three-day run of losses on Monday, as investors stuck to hopes that Britain will avoid a disorderly exit from the European Union, while positive corporate updates and comments on US-China trade talks added to the upbeat mood.

The pan-European Stoxx 600 index ended the session 0.6 per cent higher, barely budging on news House of Commons speaker John Bercow refused to allow a vote on Prime Minister Boris Johnson's Brexit divorce deal, saying the same issue had been discussed on Saturday.

A spokesman said the government would now introduce Brexit legislation this week. Lawmakers on Saturday forced the British government to seek a delay to the Oct 31 deadline, which analysts said reduced the chances of a no-deal Brexit.

London's blue-chip FTSE 100 was up 0.2 per cent, lagging the broader markets due to a strong pound, while the FTSE mid-cap index of domestically focused stocks closed up 0.4 per cent.

"The chances of a deal one way or the other are higher than they were two weeks ago, which is why the market is not falling back," said Rupert Thompson, head of research at asset manager Henderson Rowe.

"The way it would be, we're more than half way through if you actually saw the deal being approved by the Parliament."

Germany's GDAXI jumped 0.9 pre cent, leading gains among major regional indexes.

Business software group SAP's shares gained 2.5 per cent after saying it had reached a three-year deal with Microsoft to help its enterprise customers move their business processes into the cloud. The company also reiterated its forecast for the year and through to 2023.

DEFENSIVE SECTORS

German payments company Wirecard jumped 6 per cent on news the firm was hiring KPMG to conduct an independent audit to address allegations in the Financial Times that its finance team had sought to inflate its reported sales and profits.

Most sub-sectors were in the black, led by miners and banks, but defensive sectors including healthcare and real estate lagged the broader market.

Aiding sentiment, a White House official said that US tariffs scheduled for December on Chinese goods could be withdrawn if negotiations continue to go well.

Investors will be scanning third-quarter report cards from European firms to assess their health amid lingering Brexit and trade uncertainties. UK-listed RBS and Barclays are scheduled to report this week, kicking off bank earnings.

Companies listed in Stoxx 600 are expected to report a 3.7 per cent drop in third-quarter earnings, worse than the 3 per cent fall expected a week ago, according to Refinitiv IBES data.

However, early reports were positive, with shares of Swedish engineering firm Atlas Copco jumping nearly 10 per cent to the top of Stoxx 600 after it reported forecast-beating third-quarter earnings and order bookings on strong demand from chipmakers.

By contrast Smith+Nephew sank 9 per cent after the medical device maker said its chief executive Namal Nawana was stepping down after just 17 months in the role.

Meanwhile, the Berlin government's move to freeze rents put real estate companies such as Deutsche Wohnen, Ado Properties and Vonovia under pressure. Their shares fell between 1 per cent and 2.6 per cent.

REUTERS