Telecoms and banks lift European shares despite big drop in Unilever as dollar dips
LONDON (Reuters) – European stocks rose on Monday, with gains in telecoms and banks offsetting a big fall in Unilever, while uncertainty over political developments and the timing of a US interest-rate hike kept the dollar in check.
US markets were closed for the Presidents Day holiday, which restricted activity in Europe and Asia.
Unilever shares fell nearly 9% at one point after US food company Kraft Heinz Co. withdrew on Sunday a proposal for a merger with its larger rival in the face of stiff resistance.
The Anglo-Dutch group’s shares were last down 7.4% and were the day’s biggest fallers.
Despite that slide, the pan-European STOXX 600 index edged up 0.1% to just below a 14-month high touched last week.
A 3% gain in Deutsche Telekom helped push the index higher after a Reuters report that Japan’s SoftBank is prepared to give up control of Sprint to Deutsche Telekom’s T-Mobile US to clinch a merger of the two US wireless carriers.
Royal Bank of Scotland was the day’s biggest gainer as shareholders welcomed a plan to scrap the proposed sale of its Williams & Glyn unit.
Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2% and back toward a 19-month peak reached last week.
Japan’s Nikkei rose 0.1%, while China’s blue-chip CSI 300 index closed up 1.5%, its biggest gain in six months, after media reports on Friday that pension money may begin flowing into the market as soon as this week.
The dollar dipped 0.1% against a basket of major currencies after US bond yields fell on Friday.
The euro rose 0.1% to $1.0623, while the yen fell 0.2% to 113.07 per dollar. Sterling rose 0.5% to $1.2466.
The dollar hit its highest against the basket for more than a month last week, after US Federal Reserve Chairwoman Janet Yellen said it would be unwise to delay raising interest rates, before pulling back on uncertainty over President Donald Trump’s policies, particularly on trade.
Minutes of the Fed’s latest policy meeting on Wednesday will be examined for any clues about the timing of the next hike, and Fed officials speak at five events this week.
Cleveland Fed President Loreta Mester said in Singapore on Monday she would be comfortable raising rates if the economy maintained its current performance.
The focus in euro-zone debt markets was on politics.
French 10-year government-bond yields rose after an opinion poll published on Monday showed far-right candidate Marine Len Pen narrowing her centrist and center-right rivals’ lead in the final round of the presidential election in May.
This pushed the gap over benchmark German 10-year yields to 84 basis points, its widest since late 2012. It later pulled back to 72 bps.
Yields on safe-haven twoyear German bonds hit a record low, at minus-0.85%.
Among commodities, oil rose, although an increase in the number of US drilling rigs dragged on the price. Brent crude rose 38 cents a barrel to $56.19.
Gold edged up 0.2% to $1,237 an ounce.