Wednesday, 25 March 2015 21:49
LONDON: European shares retreated further from 7-1/2-year highs hit last week as a rebound in the euro pegged back stock markets and pushed the German market back off record highs.
Germany’s DAX equity index, which hit a record of 12,219.05 points last week, fell 0.6 percent to 11,928.88 points.
Data on Wednesday showed German business morale rose for the fifth month in a row in March, hitting its highest level since July 2014, while French business morale stood at its highest in nearly three years in March.
On Tuesday, figures showed Germany’s private sector grew in March at its strongest rate since July.
However, the strong German data has contributed to a rebound in the euro on currency markets, which has impacted the DAX as a weaker euro helps German exporters.
“A strong euro is generally bad for the DAX, and it’s giving investors an opportunity to take some profits,” said Hantec Markets’ analyst Richard Perry.
“But I don’t think this will change the longer-term picture for the DAX, which should continue to perform well going forward,” added Perry.
SOLID STEEL
The pan-European FTSEurofirst 300 was down by 0.7 percent at 1,592.93 points going into the close of the trading session, below 7-1/2 year highs reached last week.
European food stocks also remained in negative territory in spite of Heinz’s plan to buy a majority stake in Kraft Foods.
The FTSEurofirst has soared 16 percent this year, helped by the European Central Bank’s decision to buy government bonds to inject more liquidity into markets and boost economic growth.
“Today is a negligible correction and we should soon see the bull pressures re-energised,” said Mike Turner, European equity options broker at XBZ Limited.
Accor fell 3.3 percent after Eurazeo and Colony Capital sold a near 10-percent stake in the hotel group.
But shares in steel companies Acerinox, Outokumpu and Aperam all rose after the European Union said it will impose punitive anti-dumping duties on stainless steel cold-rolled sheet from China and Taiwan.
The EU will apply tariffs of about 24-25 percent for imports from China and of about 11-12 percent for Taiwanese product, following a complaint lodged in May 2014 by the European steel producers association, Eurofer.
Shares in oil and gas industry pipes maker Vallourec also rose 4.7 percent on speculation it plans a tie-up with another company. A Vallourec spokeswoman declined to comment.
Copyright Reuters, 2015
