European shares make modest gains as post-election rally fades

European shares made only modest gains on Thursday as a global rally that followed the US midterm elections faded, although strong results from a number of stocks soothed concerns about corporate earnings.

Wall Street stocks opened on the defensive while the dollar strengthened ahead of a monetary policy announcement by the Federal Reserve.

Dublin

The Iseq index fell 0.8 per cent, underperforming the major European markets, but the drop was described as "an anomaly" by one trader due to the volatility in the share price of Aryzta, which is conducting a rights issue to raise capital. The Swiss-Irish bakery group slumped 18 per cent to €1.23 on its secondary Dublin listing.

Building materials group CRH, the largest component of the Iseq, also posed a drag on the overall index, dropping 1.7 per cent to €26, while Paddy Power Betfair fell 1 per cent to €77.30.

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Permanent TSB gained ground in early trading after an update in which it highlighted growth in new mortgage lending, though the stock finished flat at €1.92.

Ryanair didn't sustain its Wednesday gain, slipping 0.2 per cent to €12.86. The airline has made progress in resolving industrial disputes with cabin crew in Germany, Italy, Sweden and Greece.

London

A strong earnings update from pharmaceutical company AstraZeneca helped the Ftse 100 benchmark index to a gain of 0.3 per cent.

AstraZeneca rose 4 per cent after strong demand for its new drugs – especially those for cancer – drove a return to sales growth in the third quarter and the drugmaker said it now anticipated years of sustained improvement.

Hikma rallied 5.6 per cent after raising full-year revenue expectations for its key injectables division. Hikma is supplying increased opioid painkillers amid a shortage in the US.

Coca-Cola HBC rose 5.1 per cent to the top of the Ftse 100 after the soft drink bottler reported slightly higher-than-expected quarterly revenue growth, driven by higher volumes.

Inmarsat, however, fell 7.8 per cent after trimming its full-year revenues guidance to the lower end of its previous target.

Financials provided the biggest boost to the Ftse, with shares in Lloyds, HSBC and Royal Bank of Scotland all rising more than 1 per cent.

Europe

The pan-European Stoxx 600 was up just 0.2 per cent by the close. The German Dax was down 0.45 per cent and the French Cac 40 slipped 0.1 per cent.

Shares in Italy’s third-largest lender, Banco BPM, jumped as much as 8.9 per cent, then pared gains to close 2.6 per cent higher, after its third-quarter net profit beat forecasts.

Commerzbank and SocGen were up 5.2 per cent and 2.4 per cent respectively after solid earnings updates from both banks. German construction materials firm Wienerberger also rose after results, topping the Stoxx with a 6.3 per cent gain.

French catering giant Sodexo added 5.1 per cent after it announced better-than-expected revenue figures. German engineering company Siemens rose 0.8 per cent after it said it expects to notch up "moderate" sales growth next year.

However, shares of broadcaster ProSiebenSat.1 plunged 14.5 per cent to the bottom of the Stoxx 600, hitting their lowest level in more than six years after the firm cut its dividend and warned on its full-year outlook.

US

Shares fell modestly in early trading, as investors engaged in profit-taking after the post-election rally.

A spate of weak earnings also gave investors reason for pause, with Qualcomm one of the biggest drags on the benchmark S&P 500 index, down nearly 7 per cent as the loss of chip sales to Apple caused the company to cut its fourth-quarter outlook.

The S&P banking index was up 0.9 per cent, with Bank of America Corp rising 1.8 per cent and JPMorgan Chase gaining 1 per cent ahead of the Fed decision. – Additional reporting: Reuters, Bloomberg