November 19, 2019 / 10:26 AM / 22 days ago

European shares take a breather, ease off four-year peak

(Reuters) - European stocks reversed course to close lower in a choppy session on Tuesday as lack of clarity on the progress of trade talks between Washington and Beijing kept investors from making bold bets.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 12, 2019. REUTERS/Staff

The pan-European STOXX 600 index rose 0.5% to its highest level since July 2015 in morning trade but pared gains to closer marginally lower tracking Wall Street’s retreat from record highs in early U.S. session.

Reports indicated on Monday that Beijing was pessimistic about the prospects of sealing a trade pact with Washington sending markets in a tizzy.

Some relief however, came after the Trump administration issued a new 90-day extension allowing U.S.companies to continue doing business with China’s Huawei Technologies, whose blacklisting by Washington has been a bone of contention in the trade saga.

“There is a lot of trade optimism priced in despite the mixed signals,” said Craig Erlam, market analyst at Oanda, London. “It’s just some consolidation of gains at this point as we have had a very strong run.”

Strength in defensive plays like utilities .SX6P and telecoms .SXKP that investors had taken refuge in through the previous session, started to wear out with both sectors down between 0.4% and 0.9%.

The media sector .SXMP was among the weak spots due to a 23% slide for Luxemburg-based satellite provider SES (SESFd.PA) after the Federal Communications Commission chairman backed a public, rather than private auction of spectrum for next-generation 5G wireless networks.

Macro-driven travel & leisure .SXTP led sub-sector gains powered by a 5% jump in shares of Britain’s easyJet (EZJ.L) after it posted full-year profit toward the top end of expectations.

Automakers .SXAP rebounded from their worst session in more than a month as data showed passenger car registrations in Europe rose to their highest since 2009 in October.

Miners .SXPP and industrials .SXNP gained 0.4% each.

Among individual movers, Halma Plc (HLMA.L) led gains on the STOXX 600 as well as the FTSE 100 .FTSE after the British safety equipment maker posted upbeat first-half results.

PAUSE AFTER RECORD HIGHS

A recent rally that has pushed the index to its four-year peak has been led in part by positive cues on U.S.-China trade talks and better-than-feared third quarter corporate results.

The STOXX 600 is about 2% away from reclaiming its all-time highs, hit last in April 2015.

However, analysts suggest caution as previously when the European benchmark surged in 2000, 2007 and 2015 to record levels above the 400 points threshold, a significant correction took place in the following several weeks.

Reporting by Medha Singh and Agamoni Ghosh in Bengaluru; Additional reporting by Danilo Masoni in Milan Editing by Shounak Dasgupta, Patrick Graham, Alexandra Hudson

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