Friday 23 June 2017

European shares gain after three-day losing streak

Traders gather at the post that trades Cablevision on the floor of the New York Stock Exchange. Photo: Reuters
Traders gather at the post that trades Cablevision on the floor of the New York Stock Exchange. Photo: Reuters

European shares rose on Thursday after a three-day losing streak, buoyed by gains in major consumer goods stocks such as Danone and Associated British Foods.

The pan-European STOXX 600 index, which had fallen in the last three sessions, rose 1.5 percent while the FTSEurofirst 300 index advanced 1.4 percent.

Danone surged 7 percent as investors welcomed its plans to buy U.S. organic foods group WhiteWave in a $12.5 billion deal.

"WhiteWave is a great strategic fit in terms of health orientation. The company should furthermore be a boost for organic growth in coming years," said Baader Helvea analyst Andreas von Arx.

Associated British Foods rose 7.7 percent after saying it was sticking to plans to expand its Primark clothing chain across Europe and the U.S., and sounding an optimistic note about its continued growth despite uncertainty created by Britain's vote to leave the EU.

Shares in the Swiss technology company Meyer Burger surged 17 percent after its interim results beat market estimates.

Nevertheless, the STOXX 600 index remains down around 7 percent since the June 23 vote in favour of "Brexit", with banking and British property stocks having been hit particularly hard.

Stock markets got some support from the minutes for the June 14-15 meeting of the U.S. Federal Reserve late on Wednesday, showing the Fed's policymakers had decided interest rate hikes should stay on hold until the consequences of Britain's EU referendum became clearer.

However, several traders and investors said the uncertainty created by Brexit would continue to weigh on European markets, with the STOXX 600 down around 10 percent so far in 2016.

"I prefer the U.S. market to Europe. European stocks may be up today, but it's arguably not that big a move given the shakedown we had after the Brexit vote, and there is just too much uncertainty over Europe at the moment," said Andreas Clenow, chief investment officer at ACIES Asset Management.

Reuters

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