August 14, 2018 / 7:57 AM / 3 months ago

European shares stabilise as Turkey stress eases

LONDON (Reuters) - European shares rose slightly on Tuesday after two days of heavy selling as investors’ anxieties over contagion from a Turkish currency crisis faded and reassuring data from Germany helped offset the latest wobbles in China’s giant economy.

Traders from BGC, a global brokerage company in London's Canary Wharf financial centre react as European stock markets open early June 24, 2016 after Britain voted to leave the European Union in the EU BREXIT referendum. REUTERS/Russell Boyce/File Photo

The pan-European STOXX 600 benchmark closed 0.1 percent higher, with financials weighing the most on the index and euro zone banks .SX7E down 0.5 percent.

Banks have been the worst hit by concerns over Turkey, taking the index to a 21-month low, but investors were becoming more optimistic that banks’ Turkey exposure was manageable.

“There are only a couple of European banks with some exposure to Turkey, so the overall bank sell-off yesterday seemed a bit overdone,” said Jauke de Jong, equities analyst at AFS Group.

Antofagasta (ANTO.L) shares posted the worst performance, down 7 percent after the Chilean copper producer reported first-half earnings fell due to weaker ore quality and higher costs, and said trade tensions were likely to hurt demand.

Shares of Italy’s Atlantia (ATL.MI), which owns Autostrade, fell 5.4 percent after a motorway bridge collapsed in torrential rains in the northern Italian port city of Genoa, killing at least 35 people.

Some positive corporate earnings also reassured investors.

German utility RWE (RWEG.DE) rose 3.6 percent after it said its Innogy deal was on track and reported in-line first half profits.

“Numbers were ahead of the street thanks to a solid performance by trading, which – following a negative 1Q EBITDA – posted 125 million euros during the second quarter,” said Goldman Sachs analysts.

Swiss dental implant maker Straumann (STMN.S) was a top gainer after results, up 4.5 percent after it raised its full-year revenue target as organic sales growth exceeded 20 percent for the first time in 10 years.

“Whilst we believe the growth guidance upgrade was expected, 18 percent organic growth in the first half is already tracking well ahead of new guidance,” said UBS analysts.

K&S (SDFGn.DE) shares fell 4.6 percent after the potash miner reduced the profit outlook for its Salt business.

Overall companies in the MSCI Europe index have delivered year-on-year earnings growth of 11.9 percent in the second quarter, helping to support the market.

“The resilient global activity combined with weaker euro and sterling should support earnings further into year-end, despite the challenging EM backdrop and tariffs threat,” said Barclays analysts.

Broker research also drove some sharp stock moves.

Siltronic (WAFGn.DE) shares fell 4.4 percent after Citi downgraded the stock to “neutral”, saying the stock is now trading close to fair value and there is limited scope to raise estimates.

(GRAPHIC: Lowered expectations for euro zone bank earnings - reut.rs/2P3T17Q)

Reporting by Helen Reid and Julien Ponthus; editing by Gareth Jones

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