Europe shares rise for a second day
European shares rose for a second day yesterday following heavy losses on jitters over North Korea but posted a third straight month of decline, while a profit warning from Carrefour sank the retail sector.
The pan-European STOXX 600 ended up 0.8pc, boosted by strong gains for miners and construction stocks, while the retail sector dropped 1.3pc.
Also buoying the market was a Reuters report that rapid gains in the euro - which helped drag the STOXX to a six-month low this week - were worrying a growing number of ECB policymakers, raising the chance asset purchases will be phased out only slowly.
Carrefour shares fell 13pc, their biggest daily drop in 20 years, after the French supermarket chain warned 2017 profit could decline by 12pc and cut its sales growth target. It reported weaker-than-expected first-half earnings as intense retail competition weighed on margins.
"Although Carrefour's weak first-half results are partly related to some external or non-recurring factors (integration of Eroski stores in Spain, change in credit regulation in Brazil), they also illustrate the group's structural challenges," Barclays analysts wrote.
French peer Casino fell 2.8pc as investors saw similar pressures hitting it. Analysts at Jefferies said Carrefour's results had forced a re-evaluation of their investment thesis. The retail index has been one of the worst-performing in Europe this year as competition and structural pressures mount.
"It's been a tough time for the sector, with the more macro theme that Amazon is slowly eating everyone's lunch, though that's not the case in Europe to the same extent as the US," said Paul Harper, equity strategist at DNB Bank. (Reuters)