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Europe midday: Shares rally to hover near flatline

European stocks rallied to hover at the flatline at lunchtime on Monday after a sluggish start as investors eyed bid speculation around UK supermarket chain Sanisbury’s.

The pan-European STOXX 600 index inched up 0.3%. Major regional bourses were mixed. Hong Kong’s Hang Seng fell more than 2% as trading in shares of China Evergrande was halted ahead of an announcement about a “major transaction.”

Trading in the shares of Evergrande Property Services was also halted. At the same time, the shares of another Chinese property developer Hopson were suspended.

“Investors remain on edge as broader economic concerns prevail. The imminent third quarter reporting season, set against an extremely buoyant set of results in the second quarter, will face tough comparatives and may well prove likely to have been adversely affected by general inflationary pressures,” said interactive investor head of markets Richard Hunter.

“Concerns around the property sector in China generally depressed Asian markets overnight, as Evergrande missed an interest repayment, exacerbating fears about contagion in the region.”

Investors were also concerned about stalling economic growth in the region, hitting French luxury stocks Kering and LVMH, which draw a major portion of their revenue from China, fell 1.9% and 1.5% respectively.

In equity news, shares in UK supermarket chain Morrisons fell 3.77% after US private equity firm Clayton, Dubilier & Rice won an auction for the group with a £7bn bid. Rivals Tesco and Sainsbury rose on the news, with the latter topping the Stoxx.

UK telecoms group BT Group slumped more than 7% on news Sky was ready to join forces with newly merged group Virgin Media O2 to invest in fibre broadband infrastructure.

British media company Future fell, despite reporting that it expected full-year profit at the top end of market expectations, driven by a pandemic-led boost in digital marketing at its publications.

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