February 21, 2018 / 8:51 AM / 8 months ago

Telecoms, Lloyds a bright spot on a down day for European stocks

LONDON (Reuters) - European shares retreated in early dealing on Wednesday, under pressure from a continued rise in bond yields, though well-received results updates from telecom companies, bank Lloyds and miner Glencore helped limit the declines.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, February 20, 2018. REUTERS/Staff/Remote

Europe's pan-European STOXX 600 index was down 0.2 percent by 0824 GMT, while Germany's DAX .GDAXI also fell 0.2 percent.

Another milestone in U.S. treasuries — the two-year bill yield US2YT=RR touched 2.282 percent, the highest since September 2008 — was a fresh reminder to investors of the tightening rate environment that triggered recent sharp falls in global equities.

Telecoms .SXKP was the only sector to gain, up 0.3 percent, after Telefonica Deutschland (O2Dn.DE) and Orange (ORAN.PA) both signaled some relief from the heavy downward pressure on prices of recent years. [nL8N1QB0Z9[

Orange’s (ORAN.PA) finance chief said the group remained available for consolidation talks in France. The comment failed to boost shares in its local peers, underlining the big obstacles to M&A in the sector.

Earnings updates from bank Lloyds (LLOY.L) and housebuilder Barratt Developments (BDEV.L) saw their shares rise.

Declines among European stocks were broad-based, however, with industrials and the more defensive health care and consumer staples sectors taking the most points off the STOXX 600.

Around halfway through earnings season, more than half of MSCI Europe firms have either met or beaten analysts’ earnings expectations, according to Thomson Reuters data, with the bulk of beats concentrated in tech stocks and the energy sector.

Outside of the STOXX, British mid-cap roadside recovery group AA (AAAA.L) was a notable faller, down 21 percent after cutting its dividend and saying that it expected lower profit in 2019.

Reporting by Kit Rees; editing by Tom Pfeiffer

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