May 17, 2019 / 8:04 AM / a month ago

U.S.-China trade gloom casts heavy shadow on European stocks

(Reuters) - European stocks snapped a three-day winning streak on Friday amid global trade jitters after Beijing ratcheted up its war of words with Washington, while the end of Brexit talks between British political parties put a lid on risk sentiment.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, May 17, 2019. REUTERS/Staff

The Chinese Communist Party’s People’s Daily used a front page commentary to say the trade war would never bring China down, while talks on Brexit between Britain’s opposition Labour Party and the governing Conservatives ended without agreement.[MKTS/GLOB]

The pan-European STOXX 600 index fell 0.4%, sliding from Thursday’s 10-day closing peak. The benchmark posted a 1.2% weekly gain, however, its best performance since early April.

Ben Lofthouse, head of global equity income at Janus Henderson, said investors “have moved from being slightly risk-on to risk off”.

“Markets don’t deal well with circumstances that are not well rehearsed. For global equities, trade is on people’s mind more than Brexit.”

Germany’s exporter-heavy DAX declined 0.6%, with BMW shedding 5.2% as its shares traded ex-dividend.

Milan-traded shares fell 0.2%, while peers in Paris and London edged 0.2% and 0.1% lower, respectively.

The process of the United Kingdom’s complex divorce from the European Union was jolted by the opposition Labour Party pronouncing the death of last-ditch talks due to deepening fractures in Prime Minister Theresa May’s government.[.L]

The news knocked sterling but supported the shares of exporters on the FTSE 100, as a softer pound broadly boosts the value of their overseas earnings. [.L][GBP/]

Real estate stocks shed 1.2%, with Hammerson PLC down 2.2% following a price target cut on the stock by RBC.

Banks dropped 1.1% with the stocks of most lenders on the sector index ending lower. Italy’s Banco BPM fell 3.2%.

Stocks of auto-makers and their suppliers ended a fourth straight week lower as they dropped 1.1% on the day. The sector is especially sensitive to worsening U.S.-China trade tensions.

Paris-listed Valeo fell 1.7%, while Faurecia dropped 1.3%. Food delivery companies tumbled after Britain’s Deliveroo, which is unlisted, secured funding from Amazon.com Inc.

Just Eat sank 8.2%, while Amsterdam-listed Takeaway.com and Frankfurt-listed Delivery Hero shed 4.6% and 2.3% percent, respectively.

In a bright spot, EasyJet flew 5.3% higher after the budget carrier said it would meet 2019 expectations despite a weaker trading environment.

The stock boosted the travel and leisure index, which gained 0.8%.

Reporting by Medha Singh and Aaron Saldanha in Bengaluru, Josephine Mason in London; Editing by Gareth Jones

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