Europe: Stocks break 5-day rally; Bayer, BMW weigh on DAX

[BENGALURU] European shares retreated from near six-month highs on Wednesday, with German stocks leading losses as chemicals producer Bayer and carmaker BMW tumbled, and as the European Union resisted British Prime Minister Theresa May's plea to delay Brexit.

The pan-European Stoxx 600 index fell 0.9 per cent as investors booked profits after five sessions of gains, with Bayer's near 10 per cent slump weighing the most.

Bayer's tumble came after a San Francisco jury became the second to rule against Bayer's Roundup, which was added to its products after the acquisition of Monsanto last year.

"I've stayed well clear of Bayer since the Monsanto deal," said one trader. "Bad deal, making the management look like they didn't do their homework properly."

Germany's benchmark stock index fell 1.6 per cent to its biggest daily drop in six weeks as BMW's 4.9 per cent fall after a profit warning also weighed.

Also weighing on Germany's DAX, typically sensitive to trade news, was US President Donald Trump saying US tariffs on Chinese goods could remain for a long period of time.

In the latest Brexit development, PM May's request for a three-month extension was seen as shorter than some in the market had been expecting. A longer extension would have raised the prospects of another referendum or a softer Brexit that traders believe would limit damage on the economy.

"The (Brexit) uncertainty is just paralyzing because uncertainty basically means companies won't move forward with their plans and that starts being a problem," said James Hickey, chief investment strategist at HD Vest in Irving, Texas.

The intensity of Brexit woes was evident in the half a percent decline of London's FTSE 100, breaking the usual negative correlation with sterling - a sign that worries about further chaos and damage to UK Inc outweigh the usual currency trades.

Home improvement retailer Kingfisher was the biggest loser on the index after it reported a 13 per cent fall in annual profit and that Chief Executive Veronique Laury was leaving.

Another point of caution for investors was the US Federal Reserve's statement later in the day. With unchanged rates priced in, the Fed's dot plot, the diagram which shows individual committee members' rate views for the coming three years, will be looked at for confirmation of the bank's patient stance.

All subsectors under the broader Stoxx benchmark were in the red, with the auto sector giving up almost all of Tuesday's gains.

France's CAC40 index ended a seven-day winning streak, down 0.8 per cent. Oil and gas company Total slipped 2.3 per cent after Danish container shipping A.P. Moller Maersk sold 17.3 million shares of the French company.

REUTERS