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European shares fall, pulled down by drugmakers

European shares fall, pulled down by drugmakersLONDON: European shares retreated on Tuesday from their six-week high in the previous session, with healthcare leading the market lower after Novartis reported quarterly incomes below analysts’ expectations.

The market extended losses in late trade, with poor US earnings from the likes of IBM putting pressure on Wall Street and a strengthening euro hitting Europe’s exporters.

The STOXX Europe 600 Healthcare Index was a top sectoral faller, down 1.5 percent.

Novartis dropped 2.1 percent after the Swiss drugmaker reported a weak performance by its eyecare division in the second quarter.

While the euro rallied on Tuesday, Novartis saw its results hit by strong dollar last quarter, which traders said could hurt earnings in general as investors anticipate an interest rate increase by the US Federal Reserve.

“The move in Novartis today is largely down to a strengthening dollar. Some of it was priced in, but it’s going to have a continuing effect moving forward,” said Mark Foulds, sales trader at ETX Capital.

The FTSEurofirst 300 index of top European shares was down 1.1 percent at 1,596.34 points by the close after rising to a six-week high in the previous session.

Gold prices stabilised on Tuesday just above a five-year low, with precious metal miner Fresnillo up 3.7 percent, the top FTSEurofirst 300 riser.

The price of gold had also been hit by a strong dollar.

It fell as much as 4 percent on Monday, wiping more than $ 8 billion off the combined market value of global gold-mining companies.

“Much more action has been taking place in precious metals should the slump in commodities persist and intensify, many will ask themselves if this is the precursor to another dip in global growth,” Markus Huber, senior analyst at Peregrine & Black, said.

The Greek stock market remained closed, with capital controls still in place.

The Greek government submitted legislation to parliament on Tuesday required by its lenders to start talks on a multi-billion euro rescue package.

Prime Minister Alexis Tsipras has until Wednesday night to get those measures adopted in parliament.

Swedish entertainment broadcasting group MTG rose 5.9 percent, the biggest gainer on the broader STOXX Europe 600, after it reported a smaller than expected drop in second-quarter core earnings.

Finnish paper producer Stora Enso fell 8.3 percent after it reported weaker-than-expected quarterly profit due to production problems and higher costs.

Copyright Reuters, 2015

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