April 12, 2017 / 4:35 PM / 3 years ago

Syngenta, defence stocks help European stocks steady at 16-month peak

* STOXX 600 up 0.2 pct after choppy session

* Syngenta closer to tie-up after China OK, shares up

* Geopolitical unease lifts aerodefence stocks

* Tesco drops as analysts spot weaknesses in results (Recasts with details and closing prices)

By Danilo Masoni and Helen Reid

MILAN, April 12 (Reuters) - European shares inched up on Wednesday, steadying around 16 month highs, helped by gains in Syngenta and a rally in defence stocks on investor concerns about lingering geopolitical risks.

The pan-European STOXX 600 index rose 0.2 percent but trading was choppy just a few days ahead a holiday break, while Germany’s DAX added 0.1 percent and France’s CAC was flat.

Syngenta was the biggest single-stock contributor to gains in the STOXX index, up 2.2 percent, after ChemChina’s $43 billion planned takeover of the Swiss pesticides and seeds group received approval from Chinese regulators.

Europe’s aerospace and defence stocks index outperformed, up 0.9 percent to a fresh 20 month highs.

“Every time macro political tensions arise, the sector gets a boost,” said Federico Polese, fund manager at Simplify Partners, noting however that defence spending programs are long term and do not change when the political climate heats up.

“Investors are pricing in expectations of a rise to defence spending in the U.S.,” he added.

Auto stocks also provided support but their sectoral index pared some gains to end up 0.3 percent.

French auto parts manufacturer Faurecia gained 1 percent after it posted first-quarter sales up 10 percent to 4.2 billion euros. Deutsche Bank said strong results over consecutive semesters should feed through into a valuation which is one of the lowest in the sector.

German luxury carmaker Daimler gained 0.3 percent after it said first-quarter profits jumped 87 percent on strong Mercedes sales.

Dialog Semiconductor was the top European faller for a second day, down 1.6 percent. It fell 14 percent on Tuesday after an analyst report said its biggest client Apple could be seeking to ditch its power management supply (PMIC) in favour of creating the parts itself.

“Apple PMIC insourcing fears appear overdone for Dialog,” said Deutsche Bank, reiterating a ‘hold’ rating on the stock.

Britain’s biggest retailer Tesco fell 5.7 percent as analysts pointed to a few negatives in its full-year results, including slowdown in UK and Ireland margins. (Editing by Jeremy Gaunt)

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