Europe: Shares steady as trade talks, US politics fuel uncertainty

[LONDON] European stock markets ended broadly flat on Wednesday in a session of choppy trading amidst trade talks between the US and China and uncertainty over US President Donald Trump's legal woes.

The pan-European STOXX 600 was flat in percentage terms at its close as investors waited to see whether the United States and China could make progress towards resolving their trade conflict.

Political developments in the United States have had limited effects, at least so far. US President Donald Trump's former lawyer, Michael Cohen, pleaded guilty to campaign finance violations on Tuesday and former campaign manager, Paul Manafort, was found guilty on charges of tax and bank fraud.

"Stock markets are mixed as trade talks still dominate the headlines," David Madden, market analyst at CMC Markets UK, said in a note. While a rise in the oil price boosted oil stocks and miners also powered ahead, autos were notable underperformers.

The sector dropped more than 3 per cent and was on track for its biggest daily fall since the Brexit vote in June 2016 after automotive supplier Continental AG dropped more than 14 per cent on the back of a profit warning.

Continental cut its 2018 sales and margin guidance, citing lower revenues, higher costs for developing hybrid and electric car technologies, and unspecified warranty claims.

"While most profit warnings are by definition a surprise, this one is all the more concerning as most of these headwinds were flagged and should have been evident when the company reported H2 results on 2 August; higher warranty costs being an exception," analysts at Jefferies said in a note.

Elsewhere, shares in Belgian biopharma Argenx rose 4.7 per cent after Abbvie exercised an option to develop and commercialize a drug.

Among smaller companies, Adyen, the Dutch company which processes payments for Netflix and Facebook, reported H1 profit up 75 per cent and jumped 4.3 per cent.

Though Atlantia rose earlier in the session, shares in the Italian infrastructure group declined steadily throughout the day and ended nearly 4 per cent lower.

The group said it had started looking at the impact on its shares and bonds of government plans to strip it of its motorway concessions after the Genoa bridge collapse.

Linde dipped 0.6 per cent after warning that divestments needed to secure approval for its planned tie-up with Praxair had a size that would allow either party to abandon the deal.

The industrial gases supplier nevertheless added that it was in constructive talks to salvage the US$83 billion merger.

REUTERS