LONDON (Reuters) - Losses from PostNL and Paddy Power Betfair outweighed strong basic resources and energy stocks, sending European shares down on Monday, after robust gains in the previous session.
The pan-European STOXX 600 index dipped 0.1 percent after early gains, having enjoyed its best day in three weeks on Friday as the euro fell, helping dollar-earning firms make gains.
Euro zone blue-chips held on to 0.1 percent gains, while Germany’s DAX steadied and British stocks climbed 0.2 percent.
Some investors warned the worst of the impact of a stronger euro on European equities could be yet to come.
“The euro is likely to have an impact in the third quarter, with a 10 percent appreciation of the euro lowering earnings per share by around 5 percent,” said Valentin Bissat, senior strategist at Mirabaud Asset Management.
Large losses in individual stocks sent benchmarks lower on the day.
PostNL shares fell 6.4 percent after the Dutch postal company said its full-year profits would come in at the lower end of expectations due to regulatory changes.
Shares in gambling firm Paddy Power Betfair dropped 8 percent, on track for their worst day in more than a year, after the company said CEO Breon Corcoran would step down, though the company named a new CEO to succeed him.
Fresenius Medical Care (FMC) shares fell 1.3 percent, weighing on the DAX, as a deal to acquire U.S. dialysis device maker NxStage for $2 billion in cash met with lukewarm reception.
Mining firms provided the strongest support for benchmarks, up 1.4 percent as copper and iron ore prices climbed. [MET/L]
ArcelorMittal, BHP Billiton, Anglo American, Rio Tinto and Glencore were among top European gainers, up 1.7 to 3.1 percent.
Oil stocks hit a six-week high as crude prices held near a nine-week peak.
Of the two-thirds of MSCI Europe companies having reported quarterly results, 61 percent overall have either met or beaten expectations, according to Thomson Reuters data.
Energy stocks have seen the strongest results so far, with 82 percent beating analyst estimates, while only 41 percent of industrials firms have beaten expectations.
“We are seeing big rebounds in energy and materials. On a year-on-year basis we have seen some stabilization in commodities, which is really a base effect because of the weakness of 2016,” said Alex Dryden, global market strategist at JP Morgan Asset Management.
“I don’t see huge upside in this commodities rally, but I acknowledge the strength of the numbers coming out of this space,” he added.
Banco BPM jumped 3.2 percent, leading euro zone banks higher after the Italian lender agreed the sale of its asset manager Aletti to Anima for $1.3 billion.
“On the positive side, good deal for the sale of Aletti and good operating trends with fees growing 15 percent year-on-year and net interest income in line with expectations,” said KBW analysts.
“On the negative side it was a small earnings miss ... and also a small miss for the CET1 ratio,” they added.
Reporting by Helen Reid; Editing by Janet Lawrence