Euro­pean stocks dip led by banks at the end of a strong week

Irish Independent - - BUSINESS - He­len Reid

EURO­PEAN shares dipped yes­ter­day as an­other North Korean mis­sile launch soft­ened ap­petite for riskier banks and min­ers but still scored their strong­est week since July as at­trac­tive val­u­a­tions tempted in­vestors.

The pan-Euro­pean STOXX 600 and Eu­ro­zone stocks both fell 0.3pc, while ex­port ori­ented FTSE slumped 1.1pc as the pound spiked higher af­ter a Bank of Eng­land pol­i­cy­maker opened the door for a pos­si­ble rate in­crease in the com­ing months.

Banks fell 0.9pc af­ter five straight days of gains, show­ing strain as in­vestors shed the most risky as­sets, buy­ing de­fen­sive sec­tors such as util­i­ties, up 0.1pc.

But Euro­pean stocks posted their strong­est week in two months, hav­ing hit a five-week high on Thurs­day as they re­cov­ered from a sum­mer dip. In­vestors and an­a­lysts said at­trac­tive val­u­a­tions capped losses for the re­gion’s eq­ui­ties.

“North Korea had lit­tle im­pact on mar­kets,” said Valentin Bis­sat, eq­uity strate­gist at Mirabaud As­set Man­age­ment, which up­graded its ex­po­sure to Euro­pean stocks on Mon­day.

“Euro­pean eq­ui­ties con­tinue to ben­e­fit from solid growth, and US in­vestors also con­tinue to be in­vested in Euro­pean eq­ui­ties with more in­ter­est­ing val­u­a­tion and the pos­i­tive FX ex­change rate that mag­ni­fies re­turns in USD.”

Bro­ker rat­ing changes moved some of the top gain­ers and losers.

Pharma com­pany Gri­fols dropped 3.3pc as Ke­pler Cheuvreux an­a­lysts said a re­cov­ery in mar­gins could take longer than ex­pected, re­mov­ing the stock from their Ibe­rian top picks.

They pointed to the weaker dol­lar weigh­ing on Gri­fols, which like many Euro­pean health­care com­pa­nies is highly ex­posed to the United States.

Gold­man Sachs strate­gists down­graded the sec­tor to neu­tral last week cit­ing its sen­si­tiv­ity to US poli­cies. (Reuters)

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