European shares advance as U.S. tariff suspension hopes boost autos

 

Article by: Reuters
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LONDON (Reuters) - A strong rise across autos boosted European shares on Thursday, as hopes over a softening in U.S. trade rhetoric lifted the sector, though trading remained cautious ahead of a U.S. deadline to impose tariffs on Chinese goods.

The pan-European STOXX 600 index was up 0.4 percent by 0859 GMT, while Germany's exporter-heavy DAX .GDAXI rose 1 percent, supported by autos.

European stocks have traded in a narrow range this week in anticipation of U.S. tariffs on $34 billion of Chinese imports set to go into effect on Friday.

Sectors which have been particularly hit by the uncertainty over the trade rift made some headway on Thursday, with autos .SXAP jumping 3.2 percent, while basic resources .SXPP rose 1.3 percent and banks .SX7P were up 1.1 percent.

German autos BMW (BMWG.DE), Daimler (DAIGn.DE), Porsche PSHG_P.DE and Volkswagen (VOWG_p.DE) were among the biggest STOXX risers, up as much as 4.7 percent following a report about a U.S. offer to suspend threats to impose tariffs on cars imported from the European Union.

“The damage potentially may have already been done with some of these downturns, with some of these stocks, and now is a good time to make a few value plays under the assumption that these trade tariffs might not actually come to fruition,” Jasper Reimers, market analyst at Vertex Capital Group, said.

“With the deadline tomorrow for trade tariffs, there’s clearly a lot of buying into this market at the moment.”

Autos have struggled in 2018 and remain down 8 percent for the year, among the worst-performing sectors in Europe.

Europe’s tech sector .SX8P, which came under pressure in the previous session after a Chinese court banned U.S. peer Micron (MU.O) selling chips, regained ground with a 1 percent rise.

Elsewhere, company updates were in focus. Shares in France’s Sodexo (EXHO.PA) were one of the biggest STOXX 600 gainers, up 5.2 percent after the food services and facilities management group maintained its full-year goals despite posting slower third-quarter sales growth.

However, shares in Primark-owner Associated British Foods (ABF.L) slid around 5 percent after the company warned again on the outlook for its sugar business, though it maintained its overall guidance for the full-year.

SBM Offshore (SBMO.AS) was the biggest faller, down nearly 7 percent after a Brazilian court ordered Petrobras (PETR4.SA) to provisionally withhold some payments to SBM to ensure the Dutch company paid whatever penalties it received in a corruption case.