Europe midday: Takeover news lifts shares after tepid start
European stock markets eased into the green at lunch on Wednesday, spurred on by takeover activity to distract investors from the surging number of Covid cases.
The pan-European STOXX 600 was up 0.28% with the German DAX, French CAC 40 and UK FTSE 100 all higher. US futures indicated a slightly higher opening on Wall Street.
CMC Markets analyst Michael Hewson said weak October US retail sales were starting to reveal the economic damage being caused by subdued consumer activity.
Retail sales only rose 0.3%, slightly lower than was expected, and were the weakest since April.
“With cases of coronavirus continuing to rise sharply in the US, and various states locking down in the face of colder weather, and rising cases, it is now becoming much more obvious that the next two months are likely to be even worse for US businesses, particularly since another fiscal stimulus plan still seems quite some way off,” Hewson said.
“As a consequence, US markets slipped back into negative territory, closing lower for the first time in three days. After yesterday’s modest pullback markets here in Europe look set to continue that softness as the investors start to focus more on the near term issues of the economic damage caused by extended lockdowns and restrictions, rather than the prospect of a vaccine that still remains some weeks away.”
In the UK official data showed inflation edged higher in October as the price of clothing rose.
Consumer price inflation rose to 0.7% in October from 0.5% in September. Economists had been expecting 0.6% growth. Meanwhile, core inflation increased to 1.5% from 1.3%, versus expectations for no change.
In corporate news, RSA Insurance shares gained almost 4% after the company said it had received a £7.2bn cash offer from Canadian peer Intact Financial and Danish insurer Tryg.
Deutsche Boerse rose after the German stock exchange operator said it would acquire an 80% stake in corporate governance adviser Institutional Shareholder Services for about $1.8bn.
Shares of Micro Focus International surged 27% as the software firm forecast annual margins at the upper end of expectations.
Air France-KLM shares fell more than 3% after a report the airline was in talks to raise another €6bn from two government stakeholders and investors.
British Land lost ground as it posted a decline in underlying half-year profit as the value of its retail assets fell by nearly 15%. The company also warned that due to concerns about Brexit and Covid-19, office leasing volumes will be lower as customers defer long-term decisions.
Spirax-Sarco Engineering was weaker despite backing its full-year expectations and reporting an improvement in third-quarter trading.
Investment platform Hargreaves Lansdown fell after an offering of 6.7m shares by co-founder Stephen Lansdown was priced at 1,535p each, which is a 5% discount to the closing share price on Tuesday. According to terms seen by Bloomberg, the stake was offered by PHL Limited, an entity controlled by Lansdown.
Shipping group Maersk slipped after the company reported quarterly sales and operating profit in line with previous forecast and maintained its earnings forecast.