LONDON, Dec 18 — European shares recovered today as gains for Swedish truck maker Volvo and defensive sectors offset worries about a hard Brexit that continued to pressure UK mid-cap shares.
The pan-European STOXX 600 inched up 0.3 per cent to near Monday’s record high, encouraged by a Conservative victory in UK elections and a preliminary US-China trade deal.
Encouraging corporate updates from several large companies helped to drive markets higher.
Shares in Volvo AB gained 3.5 per cent after Japan’s Isuzu Motors agreed to buy Volvo’s UD Trucks business and tie up with Volvo to cut costs and develop electric and self-driving technologies.
British education company Pearson rose 2.9 per cent after agreeing to sell its remaining 25 per cent stake in publisher Penguin Random House to German partner Bertelsmann, generating net proceeds of about US$675 million (RM2.7 billion).
Most regional indexes were trading higher. Germany’s DAX recovered some losses after the Ifo Institute reported German business morale rose more than expected in December, a sign that a manufacturing crisis in Europe’s largest economy may be bottoming out.
However, domestically focused UK stocks fell 0.5 per cent amid worries about British Prime Minister Boris Johnson’s taking a hard line on Brexit. London’s exporter-heavy FTSE 100 rose 0.2 per cent as the pound erased all its from the Tory victory.
“Clearly, Brexit is a big worry and some of the euphoria over the US-China trade deal is wearing off, too,” said IG Markets analyst Chris Beauchamp. “It’s not surprising to see the stocks struggling a bit to get the momentum.”
Defensive sectors such as healthcare, food and beverage and utilities led gains on the main STOXX 600 index.
Among other stocks, Peugeot maker PSA rose 1.5 per cent after Fiat Chrysler and the French carmaker agreed on a binding merger in a US$50 billion deal.
Shares in Swedish bank SEB slipped 1.2 per cent after the country’s financial regulator said it had taken its investigation of anti-money laundering controls at its Baltic operations to a new level.
Among losses, Danish luxury TV and stereo maker Bang & Olufsen fell 14.3 per cent after cutting its revenue and operating margin outlook.
Shares in French drugmaker Ipsen, among the worst- performing healthcare stocks on the STOXX 600 this year, fell 3.6 per cent after the company announced the departure of its chief executive officer. — Reuters
