LONDON, Sept 28 — A rally in mining shares lifted European shares yesterday, but still ended the week lower for the first time in six weeks due to persistent concerns about the economy, the ongoing US-China trade dispute and uncertainty over Brexit.
London’s blue-chip index, packed with companies whose revenues tend to rise when Britain’s pound falls, led the gains, after the currency took a hit from the Bank of England’s first clear signal that it was considering an interest rate cut.
The FTSE 100 rose 1 per cent to close at its highest in almost two months, while the pan-European STOXX 600 index rose 0.5 per cent, with the basic resources sector gaining 1.7 per cent.
Over the week, STOXX 600 lost 0.3 per cent as gains over the last two sessions failed to make up for losses earlier in the week when poor business activity readings and dramatic twists to the saga of Britain’s exit from the European Union dented sentiment.
Concerns about the economy resurfaced yesterday, with data showing plunging economic sentiment in the euro zone, but an increase in services sentiment was a bright spot, underlining that weakness in the manufacturing sector had not yet spread to services.
“That’s a positive sign. If you were looking for any sign of strength in the European economy then the services sector is one to look for,” said Bert Colijn, a senior economist for eurozone at ING in Amsterdam.
Osram was among the biggest gainers on the pan-region index after, up 5.4 per cent, after Austrian sensor maker AMS raised its takeover offer for the German lighting group to €4.5 billion (RM20.6 billion).
Hopes for a quick resolution to the US-China trade war also hung over the market, with CNBC reporting that talks are scheduled for October 10-11.
However, shares of semiconductor companies Infineon , AMS and ASM International came under pressure after Micron forecast first-quarter profit below Wall Street targets.
Defensive sectors — healthcare, real-estate and utilities — were the only decliners among major European sectors yesterday. But all three ended with gains over the week as profit warnings from European companies this week have fuelled fears of recession.
For the week to come, euro zone manufacturing and services sector PMIs for September as well as August retail sales will be closely watched.
A World Trade Organization decision whether to officially authorise US tariffs on European goods imports due to illegal state aid provided to Airbus due on Monday will also be watched. — Reuters
