July 16, 2018 / 7:40 AM / 3 months ago

Oil drop hits European stocks, Deutsche Bank offsets losses

LONDON/MILAN (Reuters) - European shares fell on Monday, led lower by commodity stocks as an upbeat update from Deutsche Bank and expectations of a strong earnings season kept a lid on losses.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 21, 2018. REUTERS/Tilman Blasshofer

The pan-European STOXX 600 index fell 0.3 percent, with the energy sector the biggest drag as crude prices fell sharply as concerns about supply disruptions eased.

Basic resources .SXPP and autos .SXAP were also lower as data from key commodity consumer China showed economic growth slowed in the second quarter amid growing worries over a trade war with Washington.

On the plus side, second-quarter earnings for the STOXX 600 are expected to grow 8.1 percent year-on-year, an improvement on the first quarter.

“Earnings results will likely be strong,” wrote JP Morgan strategist Mislav Matejka in a note.

“...The guidances are the unknown, but we note that trade headlines might be losing some of the shock value as many investors now expect further bad news on this front.”

Results drove some of Europe’s biggest movers.

Deutsche Bank (DBKGn.DE) shares jumped 7.3 percent to a six-week high after the German lender reported preliminary second-quarter results above consensus with a better-than-expected capital buffer.

Worries over the bank’s solvency have cratered its shares, down 36 percent year-to-date. Its gains on Monday helped lift the banking sector index .SX7P 0.3 percent.

In other earnings-driven moves, fish farmer Marine Harvest (MHG.OL) fell 1.1 percent after it reported lower second-quarter earnings and harvest volumes below its guidance.

Drugmaker Indivior (INDV.L) surged 16.9 percent after a U.S. court blocked India’s Dr. Reddy’s Laboratories (REDY.NS) from selling generic versions of its bestselling opioid addiction treatment in the United States.

Kone (KNEBV.HE) rose 1.3 percent after a report that the Finnish elevator firm and Germany’s Thyssenkrupp had held merger talks. Thyssenkrupp (TKAG.DE) was down 0.1 percent.

French technology consultancy firm Altran (ALTT.PA) edged up 0.6 percent after Friday’s 30 percent plunge on the discovery of forged orders at its recently acquired U.S. business Aricent.

To view a graphic on earnings growth europe versus us, click: reut.rs/2JdjJXH

Reporting by Helen Reid, Editing by Toby Chopra and John Stonestreet

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