European Stocks Mixed in Early Trade as Soft Pound Supports FTSE 100 Index

European Stocks Mixed in Early Trade as Soft Pound Supports FTSE 100 Index

European equity benchmarks were mixed on Tuesday morning as a soft pound bolstered stocks on London’s benchmark index, the FTSE 100, as Brexit talks between British Prime Minister Theresa May and European Commission President Jean-Claude Juncker continued to face hurdles.

The pound slumped from trading at $1.35336 around midday on Monday – when there had been hopes that May and Juncker might strike a deal – to $1.33747 earlier on Tuesday morning before partially recovering losses to trade at $1.34223 at present. As around 75% of stocks listed on London’s benchmark index derive revenue in foreign currencies, a weak pound boosts turnover when converted back to Sterling.

On Monday, British Prime Minister Theresa May had to pull out of an agreement with other European Union leaders which would have paved the way for the start of trade negotiations between after Northern Ireland’s Democratic Unionist Party presented fierce resistance, according to news reports. A key issue at stake is the status of the Northern Irish border when Britain leaves the shared currency union. May has the tricky job of securing compromises among Britain’s key political parties in order for a Brexit deal to be struck while not alienating the remaining members of the bloc with whom Britain is seeking to forge fresh trade deals.

In other economic news, the rate of euro area economic expansion moved up a gear in November, according to research published by Markit. Output growth accelerated to the fastest in over six-and-a-half years, while rates of increase for all of the main survey indicators covering demand, employment and inflation also hit multi-year highs.

In equities, supermarkets were leading the gainers on London’s FTSE 100 Index, with Morrison (Wm) Supermarkets, Tesco and Sainsbury up by 3.7%, 3.1% and 2.4%, respectively. Rolls Royce, a manufacturer of power systems, was 1.8% higher.

On Frankfurt’s DAX, Vonovia, a housing association, was 1.3% higher, E.on, an electric utility service provider, was up by 1.1% and RWE, an electricity distribution company, was 0.9% higher. Exchange organization Deutsche Boerse was also up by 0.9%. And, on Paris’ CAC-40, oilfield services company TechnipFMC was 2.0% lower, Sanofi, a health care company, was down by 1.1% and STMicroelectronics, a manufacturer of semiconductors, was 0.9% lower. LVMH Moet Hennessy Louis Vuitton, a retailer of designer clothing and accessories, was also down by 0.9%.

The pan-European Stoxx 600 Index was 0.06% lower, London’s FTSE 100 Index was up by 0.31%, Frankfurt’s DAX was 0.06% higher and Paris’ CAC-40 was 0.07% lower at the time of writing.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.

Related posts