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European shares hit two-week low as euro surges
[MILAN] European shares fell on Monday as the euro strengthened after ECB chief Mario Draghi expressed no concern about a strong currency in a closely watched speech.
The Stoxx index for euro zone stocks .StoxxE fell as much as 0.7 per cent to a two-week low before paring its losses to end 0.4 per cent lower on the day. London was closed for a holiday, reducing activity.
The export-oriented DAX .GDAXI fell 0.3 per cent and the broader pan-European Stoxx 600 index slipped 0.5 per cent.
In a speech at a symposium of central bankers at Jackson Hole, Wyoming, Mr Draghi did not try to talk down the euro, which climbed to its highest in more than two years against the US dollar.
"The Jackson Hole meeting has been explosive for the euro and the US dollar traders," London Capital Group analyst Ipek Ozkardeskaya said in a note.
Euro zone shares reached their highest in more than two years in May, as strong macro data and company results drew investors. But the recent surge in the euro has weighed on stocks.
Almost all sectors suffered losses on Monday with materials .SXPP and construction stocks .SXOP the biggest drag to the region's equities.
Finnish paper makers Stora Enso and UPM-Kymmene fell 3.7 to 5.1 per cent after a report that Danske Bank downgraded them, citing a weaker US dollar, higher input costs and lower prices of paper mass.
Reinsurance stocks suffered after flooding triggered by Tropical Storm Harvey devastated Houston. Shares in Hannover Re were fell 1.3 per cent and Munich Re 0.9 per cent. French reinsurer Scor dropped 1.5 per cent.
Shares in German drugmaker Stada suffered some selling, down 3.6 per cent, as investors took profits after the stock surged to an all-time high on Friday when hedge fund Elliott increased its stake in the company.
Dutch supermarket group Ahold Delhaize stumbled again, down 2.6 per cent after sharp losses on Friday when Amazon's plans to cut prices at Whole Foods Market dented retailer stocks.
Broker Raymond James cut its target price on Ahold to factor in "growing competitive risk" from the merger.
Among the very few gainers were shares in tyre maker Michelin, which gained 1.5 per cent after Oddo BHF analysts raised the stock to a "buy", saying a pick-up in agricultural and mining sectors would benefit the firm's specialty tyre business.