July 20, 2018 / 7:39 AM / 4 months ago

Disappointing earnings, trade tensions send European shares south

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LONDON, July 20 (Reuters) - European shares tumbled on Friday as autos and banks stocks gave up their gains amid rising trade tensions which caused a selloff in the Chinese yuan and U.S. stock markets overnight.

Autos shares, the most sensitive to trade tensions as U.S. officials work towards slapping tariffs on car imports, were the biggest fallers, down 1.1 percent, having enjoyed some relief this week.

Financials were the biggest drag on the pan-European STOXX 600 as sentiment on U.S.-China relations soured, while investors bought sectors like healthcare and consumer staples, considered less risky.

The STOXX 600 fell 0.1 percent as earnings streamed in with several big disappointments causing shares to slide.

Paper maker Stora Enso sank 11.9 percent after reporting that second-quarter profits missed expectations, blaming production problems, maintenance and tight wood supply.

It dragged down peer UPM-Kymmene, down 3.6 percent, while paper packaging maker Huhtamaki also fell 6.5 percent after its results.

UK insurer Beazley fell 12.7 percent to the bottom of the STOXX after reporting a 64 percent fall in its first-half profit as returns were hit by rising U.S. interest rates.

Faurecia initially made gains after it reported higher first-half profit and raised its outlook, but the stock fell back 5.2 percent as analysts saw margin growth as disappointing.

Among rare gainers were Recordati and Orion, both gaining from broker recommendation upgrades.

Meanwhile, in an earnings season where investors are honing in on companies’ future guidance, profit warnings savaged some shares.

Shares in food processor Wessanen fell 22 percent to a one-year low after the firm cut its organic growth outlook for the year to “moderate”.

Belgian steel wire maker Bekaert plunged 25 percent to a five-year low after it said it expected underlying operating profit 20 percent below analysts’ estimates in the first half, blaming wire rod costs partly driven up by tariffs. (Reporting by Helen Reid, Editing by Kit Rees)

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