Disappointing earnings weigh on European shares

Source : REUTERS
By : Kit Rees
Last Updated: Wed, Oct 19, 2016 14:38 hrs
Share Market

European shares edged lower on Wednesday after a slew of weak financial updates weighed on British firms Travis Perkins and Reckitt Benckiser , and on Dutch paint maker Akzo Nobel whose results were hit by a weak pound.

The pan-European STOXX 600 index fell 0.2 percent, following a 1.5 percent rise in the previous session.

Building materials supplier Travis Perkins dropped 5.7 percent and was on track for its biggest daily loss since July after the firm warned its 2016 profit would be hit by a disappointing performance in its plumbing and heating business.

The company also said that it would close more than 30 branches.

"It seems to be the suppliers that are really getting hit," Ken Odeluga, market analyst at City Index, said.

"On the secondary level of the home market, where you've got the materials providers, they may be seeing the first negative impact from the slide of the pound and the rise in the input and output costs."

Consumer goods maker Reckitt Benckiser also fell, down 3.2 percent after reporting a bigger than expected slowdown in underlying third-quarter sales growth.

"The factors behind the subdued performance are as previously guided, so the South Korean litigation/de-stocking, a weak Russian performance and Hygiene growth hit the failure of a Scholl/Amope NPD initiative to land," Darren Shirley, analyst at Shore Capital Markets, said in a note.

Price pressures and a drop in the value of sterling hit Dutch coatings and paints maker Akzo Nobel, which retreated 2.7 percent after reporting a slide in quarterly sales.

Broker downgrades also weighed, with Sweden's Getinge down 2.8 percent after JPMorgan cut its target price on the stock.

However, the top riser on the STOXX 600 index was Edenred . The French voucher and prepaid card provider gained nearly 7 percent after unveiling a three-year strategic plan. [

It was joined by Swedish debt collector Intrum Justitia and French hotel operator AccorHotels, which both rose on the back of well-received results.

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