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Europe: Stocks end flat as defensive gains offset auto slide

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European stocks ended flat on Monday as a spurt of defensive buying over uncertainty surrounding US-China trade talks helped temper losses in the auto sector.

[BENGALURU] European stocks ended flat on Monday as a spurt of defensive buying over uncertainty surrounding US-China trade talks helped temper losses in the auto sector.

The pan-European Stoxx 600 index finished little changed, after having spent most of the session in negative territory.

The European automobiles and parts sector dropped 2.1 per cent, its steepest fall in about four weeks, with Germany's Volkswagen leading declines after it slashed its operating profit and sales growth outlook due to slowdown in the auto sector.

"Volkswagen is seen as a barometer for the industry and any kind of warning from them can be concerning," said David Madden, market analyst at CMC Markets in London.

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This comes after a string of automakers including fellow German peer Daimler and part supplier Continental warned of tough times for an industry facing higher investments into cleaner and self-driving technologies.

Also weighing on the sector was an over 3 per cent decline in shares of France's Peugeot after Deutsche Bank downgraded the stock to "hold."

Conflicting trade headlines kept investors cautious with sectors traditionally considered defensive, such as real estate, utilities and healthcare leading gains.

News on the trade war was conflicting. Sentiment in the afternoon took a hit after a CNBC report said the mood in Beijing about a deal was pessimistic due to US President Donald Trump's reluctance to roll back tariffs.

However, late in the session, the Trump administration issued a new 90-day extension allowing US companies to continue doing business with China's Huawei Technologies.

"The comments from both countries are getting hard to follow now, they change their tone every other day," said Hubert de Barochez, economist at Capital Economics, London.

Gains in defensive stocks including AstraZeneca, GlaxoSmithKline and British American Tobacco helped London's blue-chip FTSE 100 rise 0.1 per cent, to outperform the broader market.

Optimism surrounding a Sino-US trade talks and better than expected corporate results had helped Stoxx 600 hit 4 year high last week.

In a bright spot, shares of Bolsas y Mercados Espanoles (BME) rocketed 38 per cent as stock market operator Euronext and Switzerland's SIX sparked a bidding war for the Spanish firm, with both trying to snap up one of Europe's last standalone stock exchanges.

Qiagen jumped 8 per cent after the German genetic testing company said it would start talks with several potential suitors.

REUTERS