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Europe: US-China trade gloom casts heavy shadow on stocks

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[BENGALURU] European stocks snapped a three-day winning streak on Friday amid global trade jitters after Beijing ratcheted up its war of words with Washington, while the end of Brexit talks between British political parties put a lid on risk sentiment.

The Chinese Communist Party's People's Daily used a front page commentary to say the trade war would never bring China down, while talks on Brexit between Britain's opposition Labour Party and the governing Conservatives ended without agreement.

The pan-European Stoxx 600 index fell 0.4 per cent, sliding from Thursday's 10-day closing peak. The benchmark posted a 1.2 per cent weekly gain, however, its best performance since early April.

Ben Lofthouse, head of global equity income at Janus Henderson, said investors "have moved from being slightly risk-on to risk off".

sentifi.com

Market voices on:

"Markets don't deal well with circumstances that are not well rehearsed. For global equities, trade is on people's mind more than Brexit."

Germany's exporter-heavy DAX declined 0.6 per cent, with BMW shedding 5.2 per cent as its shares traded ex-dividend.

Milan-traded shares fell 0.2 per cent, while peers in Paris and London edged 0.2 per cent and 0.1 per cent lower, respectively. The process of the United Kingdom's complex divorce from the European Union was jolted by the opposition Labour Party pronouncing the death of last-ditch talks due to deepening fractures in Prime Minister Theresa May's government.

The news knocked sterling but supported the shares of exporters on the FTSE 100, as a softer pound broadly boosts the value of their overseas earnings.

Real estate stocks shed 1.2 per cent, with Hammerson PLC down 2.2 per cent following a price target cut on the stock by RBC.

Banks dropped 1.1 per cent with the stocks of most lenders on the sector index ending lower. Italy's Banco BPM fell 3.2 per cent.

Stocks of auto-makers and their suppliers ended a fourth straight week lower as they dropped 1.1 per cent on the day. The sector is especially sensitive to worsening US-China trade tensions.

Paris-listed Valeo fell 1.7 per cent, while Faurecia dropped 1.3 per cent.

Food delivery companies tumbled after Britain's Deliveroo, which is unlisted, secured funding from Amazon.com Inc.

Just Eat sank 8.2 per cent, while Amsterdam-listed Takeaway.com and Frankfurt-listed Delivery Hero shed 4.6 per cent and 2.3 per cent, respectively.

In a bright spot, EasyJet flew 5.3 per cent higher after the budget carrier said it would meet 2019 expectations despite a weaker trading environment.

The stock boosted the travel and leisure index, which gained 0.8 per cent.

REUTERS