EUROPE MARKETS: European Stocks Nudge Higher As Catalan Worries Keep Gains In Check
October 20 2017 - 12:02PM
Dow Jones News
By Carla Mozee and Sara Sjolin, MarketWatch
Volvo shares rally after bullish earnings report
European stocks edged higher Friday, but with traders choosing
to err on the side of caution as worries persisted about the
Spain-Catalonia standoff over independence for the wealthy
region.
What did stocks do?
The Stoxx Europe 600 index rose 0.3% to close at 390.13, led by
financial shares.
For the week, the regional benchmark lost 0.3%, marking its
first weekly loss in six.
In Madrid, the IBEX 35 on Friday drifted between gains and
losses, as Catalan separatists vowed to protest the expected
withdrawal of autonomy from the region. The index closed 0.3%
higher at 10,222.70.
Germany's DAX 30 index closed marginally higher at 12,991.28,
and France's CAC 40 added 0.1% to reach 5,372.38.
In London, the FTSE 100 closed essentially flat at 7,523.23,
paring a bigger advance at the open
(http://www.marketwatch.com/story/ftse-100-gains-as-us-budget-vote-pushes-pound-lower-2017-10-20).
What's driving markets?
European stocks were driven in part by a decline in the euro
against the U.S. dollar, as a weaker euro can make European
products less expensive for overseas customers to purchase.
The dollar rose after the U.S. Senate late Thursday narrowly
approved a Republican budget resolution
(http://www.marketwatch.com/story/senate-republicans-approve-budget-proposal-clearing-path-to-tax-overhaul-2017-10-19).
The 51-49 vote paves the way for tax measures backed by U.S.
President Donald Trump that could lead to $1.5 trillion in U.S. tax
cuts over a decade, analysts said.
The swing to a weekly decline in European stocks was driven in
part by Spanish shares, which have struggled as tensions over
Catalonia's bid for independence persist.
The Spanish central government on Saturday is slated to hold an
extraordinary meeting to invoke Article 155 of the country's
constitution. That would trigger the process to strip Catalonia of
some of its home-rule powers
(http://www.marketwatch.com/story/standoff-in-spain-intensifies-as-government-gears-up-to-strip-autonomy-from-catalonia-2017-10-19),
after Catalan leaders failed to meet a demand to give up their push
for secession.
What strategists are saying:
"The Trump trade has been reignited, so it seems. Tax reform is
definitely back on--if it was ever off, thanks to the Senate
approving of the Republican-backed budget Thursday night," said
Neil Wilson, senior market analyst at ETX Capital, in a note.
"We also saw a slightly more positive tone out of Brussels with
respect to the Brexit talks after German Chancellor Angela Merkel
acknowledged that the EU side also needed to move on its
negotiating position in the Brexit talks," said Michael Hewson,
chief market analyst at CMC Markets UK, in a note.
"This would appear to be a significant shift of tone at a time
when the EU stance has previously shown no signs of compromise,"
Hewson added.
Brexit in focus: Donald Tusk, president of the European Council,
said European Union leaders have given the go-ahead to start
internal discussions on the second phase of Brexit talks. However,
that does not mean those talks on trade are ready to start,
observers said.
(https://twitter.com/eucopresident/status/921308246127857664)
Meanwhile, U.K. Prime Minister Theresa May said line-by-line
work will continue on reaching an amount for the U.K.'s exit bill
that the EU says it must pay. EU leaders were wrapping up their
summit in Brussels on Friday.
Stock movers
Among the biggest gainers in the Stoxx Europe 600 index, Volvo
(VOLV-B.SK), rallied 7%. The move came after the Swedish truck
maker reported a surge in third-quarter net profit, easily beating
analyst estimates
(http://www.marketwatch.com/story/volvo-profit-beats-views-as-truck-orders-surge-2017-10-20),
as truck and construction-equipment orders climbed.
Shares of Ericsson AB (ERIC) jumped 8%, even as the Swedish
wireless-communications gear supplier's third-quarter net loss
widened sharply.
(http://www.marketwatch.com/story/ericsson-losses-widen-sharply-amid-shake-up-2017-10-20)
Accor SA (AC.FR) shares fell 3.3% after the French hotelier's
third-quarter financial report.
ArcelorMittal (MT) advanced 2.1% after a ratings upgrade to buy
from neutral at UBS.
Shares of BMW AG (BMW.XE) fell 1.3% after news that European
Union competition authorities have raided the car maker's offices
(http://www.marketwatch.com/story/bmw-offices-raided-by-eu-competition-authorities-2017-10-20)
over concerns that several German auto manufacturers have violated
cartel rules.
(END) Dow Jones Newswires
October 20, 2017 12:47 ET (16:47 GMT)
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