European shares on Friday rose, with surging shares of Thyssenkrupp AG and robust defensive stocks helping equities on the continent avert the losses seen among their US peers, which slid on persisting worries about US-China trade.
US President Donald Trump said that he was in no hurry to sign a trade deal with China as a new set of US tariffs on Chinese goods kicked in, dashing hopes the world’s top two economies would salvage a last-minute trade deal.
European investors shuffled their equity holdings as they braced for more volatility on the second day of US-China trade talks, with defensive stocks gaining popularity over the course of the session.
The pan-European STOXX 600 on Friday gained 1.90 points, or 0.3 percent, to 377.48, lifting off an about one-and-a-half-month closing low clocked on Thursday, but falling 3.3 percent from a close of 390.37 a week earlier.
“If things do escalate, then this will have an impact of around 0.5 percentage points of global GDP and that would not be inconsiderable,” investment management firm Fiera Capital chief investment strategist Julian Mayo said.
Germany’s DAX on Friday rose 85.91 points, or 0.7 percent, to 12,059.83, but dropped 2.8 percent from 12,412.75 on May 3.
Thyssenkrupp — also the STOXX 600’s top gainer — was lifted 28.2 percent by short-covering on news that it would list its successful elevator business and embark on a fresh restructuring.
The level of short interest on Thursday was 38.3 million shares, the largest amount in more than four years, FIS Astec Analytics data showed.
About 6.1 percent of Thyssenkrupp’s outstanding shares were out on loan.
Thyssenkrupp shares’ barnstorming performance on Friday helped trim the degree to which they have underperformed industrial goods and services stocks in the year to date.
French and Italian stocks each tacked on 0.3 percent, while their London-traded peers eased marginally.
Defensive stocks, such as those in the real-estate and utilities sectors, rose 0.3 percent and 1.1 percent respectively.
With yields on German bonds maturing up to 10 years from now in negative territory, according to Refinitiv Eikon data, European investors also favor defensive stocks for their dividend yields, relatively secure in a “lower-for-longer” position held by the European Central Bank.
Chemicals stocks gained 1.3 percent, with Linde PLC leading the sector index with a 4.1 percent rise.
The firm’s chief financial officer said that it would hit the upper end of this year’s earnings per share guidance if the current business environment holds up.
Stocks of automakers and their suppliers slid 1 percent to their lowest closing level in more than a month, with Daimler AG falling 3.2 percent. The sector is relatively exposed to global trade ructions.
“A trade deal getting less likely in Q2 after Trump’s moves today... Hopefully we can get a short break from Trump’s tweets and enjoy springtime instead,” Danske Bank A/S chief analyst and China economist Allan von Mehren wrote in a note.
LafargeHolcim Ltd gained 2.8 percent as the world’s top cement maker agreed to sell its Philippine operations.
Credit Suisse Group AG also raised its price target on the stock.
Additional reporting by staff writer
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