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Europe close: Autos and Oil&Gas pace losses amid trade stand-off

By Alexander Bueso

Date: Wednesday 17 Jul 2019

Europe close: Autos and Oil&Gas pace losses amid trade stand-off

(Sharecast News) - Stocks across the Continent dipped on Wednesday on the back of possible signs that Washington and Beijing might be digging in for a protracted stand-off.
Overnight, the US President said there was still a long way to go to reach a deal with Beijing, even as China's commerce minister, Zhong Shan, replied from the other side of the Pacific, reportedly telling the South China Morning Post that the country must uphold "the spirit of struggle" in order to defend its national interests.

Commenting on the underlying factors price action in financial markets on Wednesday morning, IG's Chris Beauchamp said: "The prospect of renewed trade wars is taking its toll on equity markets, as modest losses threaten to turn into something more serious.

"Momentum in equities has been with the buyers for some time now, but now the potential for a pullback begins to loom large."

By the end of trading, the benchmark Stoxx 600 had ceded 0.37% to 387.66, the German Dax had fallen by 0.72% to 12,341.03 and the FTSE Mibtel was down by 0.56% to 22,079.38.

In parallel, euro/dollar was rising 0.13% to 1.12247.

Autos&Parts was one of the weakest segments of the market after the European Automobile Manufacturers' Association reported a 7.8% drop in new car registration for the month of June, sending the Stoxx 600 sector gauge 1.47% lower.

Although the business lobby group attributed the decline to negative calendar effects. Some analysts appeared to agree, labelling the underlying trend in Eurozone sales volumes for the year-to-date as "strong", although when adjusted for prices sales had stalled.

But it was companies in the Oil&Gas that fared worst, retreating 2.07% to 323.64 following speculation that tensions between the US and Iran might be ebbing - although analysts were skeptical.

Meanwhile, Eurostat reported only modest 0.3% month-on-month drop in euro area construction output for May, but sharp downwards revisions to the figures for April meant that the sector "hit a wall" in the second quarter, analysts said.

A reading on euro area consumer prices for June on the other hand was revised higher by Eurostat to show a 1.3% rate of increase in headline consumer prices, versus a 1.2% gain in the month before.

Stock in Swedbank was getting hammered after the Nordic lender lowered its payout policy from 75% of annual profits to 50% and boosted the level of capital that it was targeting by 100-130 basis points.

Handelsbanken shares were also lower, after the Swedish lender posted a 3% dip in profits after tax to SEK 8.973bn at the half-year stage.

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