Sun, Jun 18, 2017 - Page 14 News List

European shares up as food stocks beat retail

Bloomberg

European stocks advanced for the first time in three days on Friday as a rally in food and beverage firms offset a plunge in retailers.

The STOXX Europe 600 rose 0.7 percent at the close, with all but two industry groups in the green.

Automakers outperformed after data showed European car sales rebounded last month.

Retailers slid, following US peers lower after Amazon.com Inc said it is in a definitive pact to buy Whole Foods Market Inc.

The STOXX 600 fell 0.5 percent for the week. It retreated 0.4 on Friday, led by retailers.

Analysts expect European companies to report stronger profit growth than US peers for a third consecutive quarter, thanks to a recovery in the euro area after years of sluggish growth.

The FTSE 350 Food & Drug Retailers Index slid 3 percent as Tesco PLC plunged to the lowest level since September last year, reversing a jump of as much as 4.5 percent after its first-quarter sales in the UK beat estimates.

“Investors flipped from satisfaction at the highest profits in seven years to fears that Amazon could knock Tesco off its perch as Britain’s No. 1 supermarket,” Jasper Lawler, an analyst at London Capital Group, said in a note.

Automakers rose 0.5 percent after rallying as much as 1.3 percent following the car sales data.

A brightening economic outlook and political stability in France helped the sector get back on the recovery path.

Greece’s creditors agreed to release 8.5 billion euros (US$9.5 billion) in new loans for the country, ending months of uncertainty over whether it could meet large bond payments due next month.

Basic resource stocks fell 1.7 percent while energy stocks fell 0.6 percent.

“Numbers showing the supply-demand imbalance are pushing commodities to the downside,” said David Stubbs, global market strategist at JP Morgan Asset Management.

“OPEC has been unable to control global production, and the situation in Qatar is showing it is not very united,” he added.

Large brokers have been turning away from cyclicals and into defensives lately as they see strong momentum in European data fading, removing a catalyst for the sectors most sensitive to growth.

Additional reporting by Reuters

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