European shares steady, weaker commodity stocks offset pharma rally

1 Jun 2015 | Author: | No comments yet »

European Shares Give Up Early Gains on Patchy Manufacturing Data.

European stock markets seesawed between gains and losses on Monday, as investors closely monitored Greece’s bailout negotiations ahead of a key repayment on Friday.European stocks gave up early gains Monday as some patchy manufacturing data and lasting concerns surrounding Greece dented an early rally led by pharmaceutical shares.

The Stoxx Europe 600 index SXXP, +0.40% was slightly lower at 399.79, adding to a 1.9% selloff from last week, when investors worried about Greece’s debt crisis. Activity in the sector across the region expanded in May, helped by a stronger-than-expected performance from Spain and Italy, but the overall pace of growth was reduced slightly from an earlier estimate. The country is facing a 300 million euro ($327 million) payment to the International Monetary Fund on Friday, but market participants worry the government will miss the payment unless it receives more aid from international lenders. Separate data showed that orders for Germany’s plant and machinery industry declined in April due to weak domestic demand and a sharp drop in orders from outside the eurozone.

Athens is still struggling to agree on a reform program with the creditors, which is a prerequisite for receiving the next tranche of bailout money. “Whilst the market expectation is that a compromise will be reached, it remains difficult to see how this will be achieved while Greece continues to blame everyone else and fails to take account of its own actions,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, in a note on Monday. Writing in French daily Le Monde on Sunday, Greek Prime Minister Alexis Tsipras blamed the creditor institutions for the lack of progress in reaching a reform deal, calling the demands “absurd”. The dollar was little changed against the yen but stayed in a tight range, with a lack of fresh trading cues preventing the greenback from extending last week’s rally. He also said the lenders displayed “a total indifference to the recent democratic choice of the Greek people.” Greece’s Athex Composite index GD, -1.44% was closed for trading in observance of Whit Monday.

The pound touched a high for the year of more than $1.58 last month, a week after markets cheered the Conservatives’ victory in the general election, but sterling has now more than given back those gains. Strong showing for drug makers: Europe’s pharmaceutical companies posted some of the biggest gains on Monday after positive updates from AstraZeneca PLC AZN, +0.55% AZN, -1.96% and Roche Holding AG ROG, +2.24% RHO6, +0.15% AstraZeneca rose 1.2% after presenting a positive set of data on its AZD9291 drug to treat lung cancer. Roche climbed 2.3% after the swiss drug maker said data suggested its Perjeta breast-cancer treatment helped patients live longer without the disease returning.

Italy elections: Italy’s FTSE MIB index FTSEMIB, +0.37% slipped 0.1% to 23,479.05 after Prime Minister Matteo Renzi won a tight victory in Sunday’s regional elections. His center-left Democratic Party won in five out of seven regions, stumbling against a strong showing by antiestablishment and anti-European Union parties. Other markets: Germany’s DAX 30 index DAX, +0.32% fell 0.3% to 11,384.87 after data signaled growth in the country’s manufacturing sector is slowing down. Gary Jenkins, credit strategist at London-based asset manager LNG Capital, said a Greek exit from the eurozone continues to be “seen as the major risk for the market as a whole because such an outcome may put in doubt the whole euro experiment.” Officials from the Organization of the Petroleum Exporting Countries are meeting in Vienna this week and are broadly expected not to cut output despite the global glut of oil.

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