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French stocks slip in flat European market as vote nears

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[LONDON] French blue-chip stocks underperformed other European benchmark indexes on Friday as investors retreated from risky bets ahead of the too-close-to-call first round of France's presidential election.

The CAC fell 0.4 per cent, while the pan-European STOXX index added 0.1 per cent. On the week they were down slightly but both indexes are less than 2 per cent below their highest level this year hit last week.

"So far markets have been pretty sanguine in the face of the (French) presidential election, which was flagged as one of the potential banana skins for markets in this year," Hargreaves Lansdown senior analyst, Laith Khalaf, said. "There may be a bit of political weariness among investors, but also they may just be thinking that, actually, they're not going to place market bets based on political events, and that would be an entirely sensible strategy," he said.

Among French standout movers, Danone was the biggest faller on the CAC 40, down 2.5 per cent after reporting first-quarter sales figures.

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French banks Societe Generale and BNP Paribas extended the previous session's gains, rising 1.7 per cent and 2.2 per cent respectively.

Banking stocks, which are seen as benefiting from the victory of a mainstream candidate in the French vote, were the biggest sectoral gainers in Europe, up 0.7 per cent, while basic resources stocks ended flat after gaining initially on the back of slight gains in copper prices.

Earnings and deal-making drove stock price moves elsewhere, including a jump of 7.9 per cent for Software AG, making the shares the STOXX 600's top gainer, after reporting first-quarter results. Software's quarterly core profit declined less than expected.

Tech sector peer ASM International rose 3.7 per cent after Natixis raised its target price.

Europe's earnings season kicks off in earnest next week with Credit Suisse, UBS and SAP among those reporting results.

European first quarter earnings are expected to increase 7.2 per cent from the first quarter of 2016, according to Thomson Reuters I/B/E/S data. Excluding the energy sector, this would be a rise of 2.9 per cent.

Engineering firm WS Atkins gained 6.1 per cent after Canada's SNC-Lavalin Group said it would buy the firm for C$3.6 billion, firming up this month's indicative offer.

Among other standouts, Orkla fell 3.2 per cent after going ex-dividend, while a downgrade from Panmure weighed on SSP Group's shares.

Oil stocks were a drag, falling 0.8 per cent as crude prices retreated.