European shares lower ahead of May's speech

A woman walks past the London Stock Exchange building in the City of London, Britain

A woman walks past the London Stock Exchange building in the City of London, Britain

Published Jan 17, 2017

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London - European shares were dragged

lower by miners and carmakers on Tuesday, as markets awaited

details of Britain's Brexit position in a late morning speech by

Prime Minister Theresa May.

The pan-European STOXX index was down 0.4 percent,

and Britain's blue-chip FTSE extended its losses, down

0.3 percent.

Uncertainty about Britain heading for a "hard" Brexit was

reinforced over the past week, pushing the pound to some of the

lowest levels against the U.S. dollar seen in more than three

decades.

"I get the sense we are at last entering the territory we

thought we would be in in June, and the period of 'business as

usual' is coming to an end," said Peter Dixon, economist at

Commerzbank.

There were some chinks of light in the pan-European index.

Airline carrier Lufthansa soared to the top of

Germany's DAX after an Italian paper reported Saudi telecoms

company Etihad was interested in taking an equity stake in it.

Swiss chocolate maker Lindt saw its shares gain 5.2

percent after it succeeded in increasing sales in Europe, Japan

and Brazil, facing down headwinds of low consumer confidence.

Basic resources stocks were the biggest sectoral fallers,

with the basic resources index down 1.2 percent, dragged

down by lower metals prices caused by a stronger dollar with

markets spooked over Brexit.

Anglo American, BHP Billiton and Antofagasta

were down 1.6 to 1.8 percent. Arcelormittal

was the worst-performing stock in the CAC 40.

Shares in German fashion retailer Zalando slumped

6.5 percent after its sales growth disappointed expectations.

Mediaset was down 3.8 percent after a report,

without citing sources, said a potential takeover offer for the

Italian broadcaster by France's Vivendi would not be

'judicially acceptable' for Italian communications authority

AGCOM.

Carmakers took some strain again as U.S. President-elect

Donald Trump's threat to slap import tariffs on cars made in

Mexico rippled through the market.

Peugeot was a top faller in France's CAC index,

down 1.6 percent, while German carmakers Volkswagen,

Daimler and BMW continued to weigh on the

DAX.

Italy's blue-chip FTSE MIB was the only major

European index in positive territory, boosted by an upswing in

banks Banco BPM, UBI Banca, BPER Banca

and Unicredit.

"Since the Italian referendum, market repair has

accelerated: while the stock of non-performing loans at banks is

likely to take time to revert to average levels, a series of

announcements by banks should be positive steps towards market

repair," a Goldman Sachs note said. 

REUTERS

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