August 1, 2018 / 7:47 AM / 10 months ago

European shares dip as mixed earnings fail to dispel trade fears

LONDON (Reuters) - European shares retreated slightly on Wednesday as a mixed batch of corporate earnings failed to offset concerns about the U.S.-China trade conflict and subdued euro zone manufacturing growth.

FILE PHOTO - The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 21, 2018. REUTERS/Tilman Blasshofer

Caution was also palpable ahead of the Federal Reserve’s decision, due on Wednesday after the European market close, with the U.S. central bank expected to keep interest rates on hold before two hikes later this year.

The pan-European STOXX 600 ended the session down 0.5 percent while Germany's DAX .GDAXI also declined 0.5 percent. France's CAC 40 .FCHI gave up early gains to close 0.2 percent lower.

Autos stocks .SXAP were the biggest sectoral fallers, down 2.4 percent as shares in Schaeffler SHA_.pDE>, Volkswagen (VOWG_p.DE) and Porsche PSHG_g.DE fell as much as 5.1 percent.

Shares in Ferrari (RACE.MI) dropped 8.4 percent after the company’s CEO said that their financial targets to 2022 were “aspirational”.

The autos sector has been hit particularly hard by uncertainty over global trade and tariffs.

“The latest round of tough rhetoric from the U.S. regarding its trading relationship with China has rattled investor confidence,” David Madden, market analyst at CMC Markets UK, said.

Basic materials .SXPP were also on the back foot, down 1.6 percent as copper prices slid following reports that the United States may propose a higher, 25-percent tariff on $200 billion of Chinese imports.

Rio Tinto (RIO.L) added pressure on the sector as disappointing results sent its stock down 3.4 percent despite news of an additional $1 billion share buy-back.

British airline services company’s BBA Aviation (BBA.L) was another big faller, dropping 11.4 percent after disappointing results.

On the upside, Air France-KLM (AIRF.PA) rose more than 4 percent after second-quarter results beat estimates despite recent strikes.

France’s BNP Paribas (BNPP.PA) reported forecast-beating second-quarter profits, though its shares gave up early gains to end 0.5 percent lower.

“Q2 results don’t give a big trigger for a major rebound,” analysts at Jefferies said in a note, adding that they expect a better outcome in BNP Paribas’ French retail bank to be visible in the second half of 2018.

In the UK, Lloyds Banking (LLOY.L) shone, rising 1.7 percent after reporting a 23-percent jump in first half pre-tax profit.

Apple’s (AAPL.O) positive trading update was not enough to help tech stocks, with the sector .SX8P losing 0.4 percent.

In other earnings-related moves, Belgium’s Telenet (TNET.BR) Group jumped 6.6 percent after announcing an extraordinary dividend and supportive first-half results.

Reporting by Julien Ponthus and Kit Rees; editing by Ken Ferris

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