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Europe close: Bounce in stocks fades as traders watch trade headlines

By Alexander Bueso

Date: Wednesday 20 Jun 2018

Europe close: Bounce in stocks fades as traders watch trade headlines

(Sharecast News) - Stocks staged a small bounce as investors waxed hopeful that the worst scenarios would be averted on the international trade front.
Key in that regard, in an interview Goldman Sachs chief executive officer, Lloyd Blankfein, told Bloomberg News he believed the White House's tariff threats were a "bargaining strategy".

"That's what you'd do if it was a negotiating position and you wanted to remind your negotiating counter-party of how much firepower you have [...] I don't think we're in a suicide pact on this, so I suspect we're not going to cause the economies to collapse," Blankfein reportedly said at the Economic Club of New York.

Nevertheless, a mid-morning announcement by Brussels formally approving a 25% tariff on €2.8bn-worth of US exports was enough for stocks to quickly cut their gains, although they later recovered - until China's state-owned Xinhua said Beijing would retaliate against America's latest trade threats.

Against that backdrop, by the end of trading the benchmark Stoxx 600 had settled 0.28% or 1.08 points higher at 384.29, alongside gains of 0.14% or 17.19 points to 12,695.16 for the German Dax.

Paris's Cac-40 on the other hand dipped by 0.34% or 18.32 points to 5,372.31.

Commenting on the European Commission's proposed measures, Oliver Rakau at Oxford Economics said: "The EU tariffs are well designed, targeting politically sensitive sectors that will grab media attention while doing close to no harm to Europe's economy.

"However, there is little evidence that they will succeed in discouraging another round of tariff hikes from the US. Higher US car tariffs look increasingly likely."

Also overnight, US trade advisor Peter Navarro had claimed that the US had the upper hand in trade talks with Beijing, prompting a skittish reaction from some traders.

In other news, Germany's Ministry of Finance reported a 2.7% rise in factory gate inflation in the country during the month of May (consensus: 2.5%).

Elsewhere, the Belgian central bank's consumer confidence index slipped from a flat reading for May to -3 in June.

On the corporate side of things, shares of Bayer were seeing slight gains after the chemicals giant announced it has sold €5.0bn-worth of new bonds to help finance its purchase of US rival Monsanto.

Engie was drifting lower following news that the European Commission had deemed its fiscal arrangement with Luxembourg 'unfair'.


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