London stocks drag Europe lower as Glencore, oil stocks weigh

(Reuters) - European equities declined on Thursday as London stocks were sapped after Glencore scrapped its dividend and oil stocks slid, while investors kept a close eye on Washington for progress on U.S. stimulus.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, August 5, 2020. REUTERS/Staff

The pan-European STOXX 600 index .STOXX closed 0.7% lower, with London's FTSE 100 .FTSE falling 1.3% and the German DAX .GDAXI down 0.5%.

Europe's mining index .SXPP, which rallied earlier this week, shed 2.5% after Glencore GLEN.L became the first major mining company to scrap its dividend and said that it would prioritise cutting debt.

Its shares slumped 8.1%, while energy majors BP BP.L, Royal Dutch Shell RDSa.L and Total TOTF.PA fell between 2% and 3.8% after strong gains on Wednesday. [.L]

Wall Street indexes were largely flat, stalling near record levels as U.S. Democrats and White House officials struggled to work out a stimulus package for the coronavirus pandemic-stricken economy.

“Progress has been made but doubts are creeping if a deal will be reached before another week passes,” Edward Moya, a senior market analyst at Oanda wrote in a note.

London’s exporter-heavy FTSE 100 also took a hit from a stronger pound after the Bank of England (BoE) saw no immediate case to cut interest rates below zero even as it said the economy would take longer to recover from its COVID slump than it previously forecast. [GBP/]

“This is another positive signal at a time of still considerable uncertainty,” said Chris Bailey, European strategist at Raymond James. “Conditions are still extremely difficult, and subject to negative revision, but today they have seen a chink of light.”

German stocks posted relatively small losses as engineering group Siemens SIEGn.DE rose 1.6% after forecasting a modest improvement in orders and revenue in the months ahead.

Adidas ADSGn.DE gained 1.9% as it expects a rebound in profits in the third quarter.

Among the fallers, French insurer AXA AXAF.PA slid 3.5% after it dropped its 2020 earnings target and said it would not make additional payouts to shareholders in the fourth quarter.

UniCredit CRDI.MI was down 3.9% as it vowed to stay out of a possible merger wave in Italy after reporting higher than forecast quarterly results.

Lufthansa LHAG.DE slipped 1.2% after saying it did not expect air travel demand to return to pre-crisis levels before 2024.

Of the 65% of the STOXX 600 companies that have reported results so far, nearly 60% have exceeded dramatically lowered estimates, Refinitiv Eikon data shows.

Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Barbara Lewis