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Europe: Stocks steady after four days of gains
[LONDON] European stocks edged lower on Wednesday after four straight sessions of gains to leave a benchmark regional index near its highest level in more than two weeks, with a drop in oil and gas shares weighing on the market.
The pan-European Stoxx 600 settled 0.1 per cent lower, following four straight day of gains, remaining near its highest level since late June.
The index had been in positive for much of the session, until EIA data from the United States showed an unexpected rise in oil inventories. That hit oil prices and sent the Stoxx Europe 600 Oil & Gas index down 1 per cent.
The Stoxx 600 had slumped 11 per cent in the first two trading sessions in the immediate aftermath of Britain's shock vote on June 23 to leave the European Union.
However, the index has since recovered much of that ground. It has been helped in part by expectations that the European Central Bank and Bank of England will step in to support markets against the effects of the Brexit vote, and encouraged as Theresa May won the race to succeed David Cameron as British prime minister, quelling debilitating uncertainty.
While the Stoxx 600 is down 8 per cent so far in 2016, it is up nearly 10 per cent from its post-Brexit low point reached on June 27.
"We continue to be supported by the expectations of more central bank stimulus measures, although after this rally I'm starting to turn more defensive and I've taken up some gold positions," said Rupert Baker, European equity sales executive at Mirabaud Securities.
Shares in Spanish banks such as Banco Popular and Sabadell rose after the European Court of Justice's advocate general backed a Spanish court ruling capping banks'liabilities for so-called floor clauses in mortgage contracts, offering relief for banks that had feared compensations in the millions of euros.
Banco Monte dei Paschi di Siena rose 5.4 per cent after sources said Italian bank rescue fund Atlante is in talks with the bank over a deal to help the country's third-largest lender reduce its bad debts.
However, banks were mixed, with other Italian lenders hit by China data, and Portugal's Milennium BCP down 8.8 per cent after a research note said it may need up to 3.9 billion euros in additional capital to meet European requirements.
Nokia rose 4.8 per cent after raising its sales forecast and announcing a licensing agreement with Samsung.
Credit Suisse's equity strategists changed some of their sectoral positions given the slight market rebound after the initial slump following the Brexit vote.
The Credit Suisse team cut European utilities to "underweight", while keeping a benchmark position on stocks most exposed to the domestic European economic cycle, such as staffing companies Randstad and Adecco.
"We continue to focus on the domestic demand proxies in Europe as, in our view, the European growth story looks more resilient than investors realise," they said in a note.