Adidas upgraded at Deutsche Bank; BP says it's continuing to collect oil
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares traded lower on Monday, with mineral extractors under pressure, although better-than-expected industrial production data from Germany helped keep negative sentiment in check.
The Stoxx Europe 600 index (ST:SXXP 243.81, -0.72, -0.29%) traded down 0.4% at 243.54 with miners the worst performers as Kazakhmys (UK:KAZ 1,104, -15.00, -1.34%) shares fell 4.7% and Xstrata (UK:XTA 936.40, -14.80, -1.56%) shares declined 2.2%.
The sector is leveraged to economic growth and
over the weekend, a communiqué and official comments from the Group of 20 meeting were "distinctly more cautious on the outlook for global growth," said analysts at Barclays Capital. Read more on currencies.
Overall losses on Monday added to a 1.8% drop from Friday when "the fragile air of calm that had been restored through most of last week was blown away with some force by Friday's disappointing U.S. labor-market report and another bout of panic about the euro zone's institutions," said Ian Williams, strategist at Altium Securities.
Hungary was at the center of that panic and attempted to reassure investors over the weekend that last week's comments didn't mean it was on the verge of default, stressing that it will keep its budget-deficit goal for 2010. Read more on Hungary.
Still, the euro (CUR_EURUSD 1.1972, +0.0029, +0.2428%) traded at $1.1972, broadly flat against the U.S. dollar, after hitting a fresh four-year low against the greenback on Friday.
German manufacturing orders rose 2.8% month-on-month in April, which was well ahead of a 0.5% decrease expected by economists polled by Dow Jones Newswires.
Of the main regional benchmarks, the French CAC-40 index (FR:PX1 3,441, -14.30, -0.41%) declined 1.6% to 3,399.53, the U.K. FTSE 100 index (UK:UKX 5,103, -23.35, -0.46%) declined 1.1% to 5,072.50 and the German DAX index (DX:DAX 5,930, -9.07, -0.15%) lost 1.1% to 5,871.30.
Asian shares were sharply lower, with the Nikkei tumbling 3.8% to 9,520.80, for its worst percentage loss of 2010. U.S. stock futures were pointing to another day of losses, with Dow Jones Industrial Average futures down 48 points at 9,897.
There were some advancers. Adidas (DE:ADS 41.89, +0.63, +1.53%) was up 2.5% after Deutsche Bank upgraded the German sportswear group to buy from hold, saying a combination of strong operating performance and currency tailwinds should result in higher profit.
It said Monday that the lower marine riser package containment cap, installed on June 3 in response to the oil leak in the Gulf of Mexico, continues to collect oil and gas.
BP said that optimization continues and improvement in oil collection is expected over the next few days. The cost of the response to date amounts to around $1.25 billion, BP added.
Turning to deal action and Grifols (ES:GRF 8.80, -0.47, -5.04%) shares were down 5.2% after it said that it will buy biotechnology firm Talecris Biotherapeutics (TLCR 15.92, -0.56, -3.37%) for $3.4 billion of cash and stock.
The firm mounted a robust defense of its failed bid for American International Group's Asian assets and reported a 27% rise in sales on Monday. Read more on Prudential.
