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Poor earning updates keep European shares at 12-day low

Poor earning updates keep European shares at 12-day lowMILAN: Heavy losses in utility EDF after a profit warning and other disappointing company updates weighed on European shares on Monday, while a weaker pound helped the FTSE outperform.

EDF fell 8 percent, leading losers on the STOXX 600 and helping push the pan-European benchmark index down 0.4 percent by 0934 GMT to its lowest since Oct. 26.

The French group lowered its 2018 earnings and cash flow forecasts due to lower than expected power consumption, lower availability of some of its nuclear reactors in early 2018 and a drop in capacity compensation in Britain.

Exane BNP Paribas affirmed its underperform rating on EDF.

“The market is overly focused on the power price strength and not reflecting appropriately all the other issues facing the group, including the fact that if nuclear output falls short of expectations, higher power prices are actually a negative for them,” it said in an email to clients.

Sonova was another leading faller, down 6.6 percent.

The Swiss hearing aid maker reported first-half results that fell short of analyst expectations, as sales in the US were dented by an overhaul of the company’s retail network there.

According to Thomson Reuters IBES data, about 76 percent of MSCI EMU companies have reported earnings so far, with 50 percent of them beating expectations. That compares to 72 percent for the S&P 500 and 54 percent for the broader MSCI Europe index.

Losses in EDF and Sonova were partly offset by gains in pharma heavyweight Novartis.

Its shares rose 1 percent after data showed that patients on its new eye-drug showed less disease activity than those on its rivals Bayer’s and Regeneron’s drug. Bayer was down 0.4 percent

The broader market was also supported by gains in the FTSE, which rose 0.3 percent, buoyed by gains in big export-oriented including Diageo and Shire. They found support in falls in the pound following press reports of a building parliamentary mutiny against Prime Minister Theresa May. .

The top faller on the FTSE was Coca-Cola HBC, down 5.9 percent, following a downgrade to neutral from JP Morgan.

Copyright Reuters, 2017

Source: Brecorder.com

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