Europe Shares Little Changed as Defensive Selloff Offsets Data

  • Spain’s IBEX Index posts best performance in western Europe
  • Royal Philips reports 14% increase in third-quarter profit

European Stocks Can't Hold On to Early Gains

European shares ended little changed as a late selloff in defensive stocks offset gains in banks as well as investor optimism over better-than-forecast data and Royal Philips NV’s earnings.

Philips climbed 4.4 percent, the most since January, after reporting a 14 percent increase in third-quarter profit. Spain’s Bankia SA and CaixaBank SA rose 4 percent or more, helping a gauge of lenders to the best performance on the Stoxx Europe 600 Index. Nestle SA and Anheuser-Busch InBev NV dragged food-and-beverage companies to the biggest decline on the equity gauge, while AstraZeneca Plc pulled health-care stocks lower.

The Stoxx Europe 600 Index slipped less than 0.1 percent to 344.26 at the close of trading, after climbing as much as 0.8 percent. Services and manufacturing reports showing euro-area economic momentum accelerated to the fastest pace this year in October supported the equity gauge in early trading.

“This is just profit taking before closing after a good start,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Defensive stocks like Nestle underperformed a little the higher valued stocks, but from the earnings side, we could have a nice week .”

Investors will look to the 100-plus Stoxx 600 companies scheduled to release results this week -- including Deutsche Bank AG, Barclays Plc, GlaxoSmithKline Plc and Heineken NV -- for indications of the health of corporate Europe. Analysts forecast a drop of 4.3 percent for 2016, followed by double-digit earnings growth in each of the next two years.

Spain’s benchmark IBEX 35 Index jumped 1.3 percent, the most among western-European markets, after the Socialist Party leadership opted to let acting Prime Minister Mariano Rajoy take office for a second term, ending a 10-month political impasse.

After September’s decline, the Stoxx 600 is heading for a monthly gain, as economic data return to beating forecasts, and investors speculate that the European Central Bank will both loosen and extend its bond-buying program.

A measure of lenders on the Stoxx 600 posted its fifth day of gains, reaching its highest level since May, amid optimism that the ECB is preparing to adjust its stimulus measures in ways that will boost profitability.

Among other stocks moving on corporate news: 

  • Banca Monte dei Paschi di Siena SpA soared 28 percent as Chief Executive Officer Marco Morelli prepares to present a new business plan deemed essential to its survival. 
  • EasyJet Plc added 1.4 percent after UBS Group AG raised its recommendation on the carrier to buy, saying the shares are pricing in “material” value destruction that’s unlikely to happen. 
  • Fraport AG rose 3 percent after the operator of Frankfurt airport said it has applied for an increase in the fees it charges for 2017. 
  • Zodiac Aerospace SA advanced 1.3 percent after Oddo & Cie upgraded the aircraft-seat manufacturer to buy from neutral. 
  • Syngenta AG slid 5.8 percent, the most since August 2015, on concern that China National Chemical Corp.’s $43 billion takeover of the Swiss herbicide and pesticide maker is at risk of regulatory delays in the European Union.
  • Aixtron SE tumbled 13 percent after the equipment supplier to the semiconductor industry said Germany’s economy ministry has reopened a review of a takeover by China’s Grand Chip Investment GmbH. 
  • Cobham Plc plummeted 13 percent after the U.K. aerospace and electronics supplier said its business is performing worse than expected and downgraded its full-year earnings forecast.
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