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Europe close: Deutsche leads DAX higher, all others fall

By Oliver Haill

Date: Monday 16 Jul 2018

(Sharecast News) - European stocks markets mostly ended in the red on Monday following mixed Chinese data and a warning about global growth from the International Monetary Fund, but a Deutsche Bank-led DAX bucked the trend.
The benchmark Stoxx Europe 600 index fell 0.98 points or 0.25% to 384.05, with France's CAC 40 down 0.4%, Italy's FTSE MIB down 0.3% and Spain's Ibex losing 0.2%.

But Germany's DAX picked 0.16% to finish at 12,561.02.

Mixed data out of China and a warning about global growth from the IMF were not good for sentiment. China's statistics bureau revealed the economy there slowed modestly in the second quarter, with GDP growth of 6.7%, down from 6.8% in the first quarter but in line with expectations.

Meanwhile, fixed asset investment slowed to 6% in June from 6.1% in May and industrial production slid to 6% last month from 6.8% in May, missing expectations for 6.5% growth. However, retail sales rebounded from multi-year lows of 8.5% in May to come in at 9%, meeting expectations.

Then there came a warning from the IMF that escalating trade tensions could put a further dampener on global growth amid weaker-than-expected growth in Europe and Japan.

The Washington-based organisation kept is global forecast unchanged for 3.9% this year and next, but not only does growth appear to have peaked in some major economies, but downside risks are growing, led by the threat of a stepping up of trade tensions.

Later the IMF warned that current trade tariff threats by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, resulting in around $430bn in lost GDP worldwide.

Concentrating on eurozone, the latest trade data from Eurostat revealed that the bloc's trade surplus with the rest of the world narrowed in May to €16.9bn from a downwardly-revised €18bn in April, versus consensus expectations of €18.6bn.

The historic summit in Helsinki between the US and Russia, which came on the back of indictments for 12 Russian agents in the Mueller investigation and clashes between Trump and his Nato allies last week in Brussels over their defence spending policies, saw conciliatory words on both side.

Putin declared the Cold War a "thing of the past" as he called for new talks on extending the nuclear missile treaty and both Presidents dismissed allegations that Russia had interfered in US elections.

In corporate news, Deutsche Bank surged after its second-quarter results came in comfortably ahead of analysts' expectations, with management expecting pre-tax profit of around €700m and net income of about €400m versus consensus expectations of €321m and €159m, respectively.

Neil Wilson, chief market analyst at Markets.com, said: "The results are clearly good news for new boss Christian Sewing and a welcome relief from a series of bad news reports following the restructuring announcement, including its US unit failing the Fed stress test and being placed on the Federal Deposit Insurance Corporation naughty step."

He added: "The fact is that while restructuring can deliver important cost reductions, it is less clear what Deutsche's plans are to grow revenues thereafter. Deutsche has been slow to restructure and now it's got to sprint to catch up. Today's Q2 update suggests it is riding certain market tailwinds but can it be sustained amid such tough cost cutting?"

Indivior rocketed after a US court granted a preliminary injunction to prevent Dr Reddy's Laboratories from selling a generic version of the company's Suboxone Film for treating opioid addiction until a decision is made on patent litigation.

Finnish lift company Kone was on the front foot following a report that it and Thyssenkrupp had held merger talks on their lift operations. Thyssenkrupp was also trading higher.

French publisher Lagardere gained ground following an upgrade to 'overweight' from Morgan Stanley.


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