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Oil stocks help European shares steady at 16-month highs
April 3, 2017 / 9:44 AM / 7 months ago

Oil stocks help European shares steady at 16-month highs

* STOXX up 0.1 pct at highest since Dec 2015

* Oil index hits 9-week high

* Banks led lower by Banco Popular

* Imagination Tech’s slump hits Dialog (Adds details, updates prices)

By Danilo Masoni

MILAN, April 3 (Reuters) - European shares edged up on Monday helped by stronger oil stocks, while the loss of major customer Apple hammered shares in British firm Imagination Tech, also weighing on other tech stocks in the region.

The pan-European STOXX 600 index was up 0.1 percent by 0925 GMT, following gains last week and steadying at its highest level since early December 2015. Germany’s DAX added 0.3 percent and UK’s FTSE was flat.

The oil and gas sector index rose as much as 0.7 percent to its highest level in nine weeks as investors turned more confident in a sector that has been the worst performer in Europe so far this year with a fall of 2.4 percent.

“The sector appears to be bottoming, with risk/reward skewed higher near term,” analysts at Goldman Sachs said in a note, citing expectations that producing countries may agree more output cuts and a pick of deal-making in the sector.

The oil index pared some gains but remained in positive territory, up 0.5 percent, as oil futures moved higher.

In the sector, Italian oil services firm Saipem led the gainers, up 1.3 percent, followed by OMV and Lundin Petroleum, both up 1.3 percent.

Europe’s basic resources index also rose by 0.4percent, as copper prices inched higher.

Banco Popular fell 4.8 percent, leading losers on the STOXX and helping make the European banking index, down 0.7 percent, the worst sectoral performer.

Shares in Popular fell after the Spanish lender said an internal audit identified the need of adjustments to its accounts with most of the adjustments related to doubtful loans.

“Another unhelpful development which does little to restore confidence in the balance sheet,” Jefferies analysts said.

Outside the STOXX index, London-listed Imagination Tech slumped 60 percent after Apple said it would stop using its graphics technology in the iPhone and other products.

Traders said the heavy losses in Imagination also weighed on German chipmaker Dialog Semiconductor, which counts Apple among its biggest customers. Dialog fell 3.7 percent.

Broker Northern Trust says Apple’s decision to ditch Imagination is likely a one-off, and any weakness in Dialog and peer AMS was a buying opportunity. (Editing by Stephen Powell)

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