European shares hold flat on US-Iran talks; Rheinmetall slides

BE Semiconductor Industries NV

Yesterday 09:36

STOXX 600 flat
Rheinmetall plunges on report Germany plans to scrap frigate project
Segro jumps after Prologis takes buyout bid public
Tech stocks steady after Tuesday's declines
Updates prices; adds details and analyst comments
By Utkarsh    Hathi and Johann M Cherian

    June 24 (Reuters) - European shares were muted on Wednesday, as investors assessed developments in the U.S.-Iran negotiations, while defence group Rheinmetall dropped after a media report that Germany is set to scrap plans to build its biggest warship since World War Two.
     The pan-European STOXX 600 index .STOXX edged 0.02% higher to 634.78 points by 0816 GMT.
     Among sectors, the aerospace & defence shares .SXPARO led declines, falling 1.3%, as German defence group Rheinmetall RHMG.DE dropped 13.9%, heading for its biggest single-day drop since October 1998, after a report said the country would scrap plans to build the warship.
TKMS TKMS.DE shares jumped 9.2% as the report said Germany intends to buy eight smaller frigates from the rival warship maker. 
"You've got a very unstable environment and ongoing wars. That should feed into positive sentiment towards the defence sector, but it's not happening," said Michael Field, chief equity market strategist at Morningstar.
"NATO countries committed to a higher defence spend, but the midterms in U.S. are going to happen in November. It's very likely that the Democrats are going to retake the House, if not the Senate also. And then Donald Trump's ability to pressurize NATO countries into spending will wane."
The real estate sector .SX86P limited declines on the STOXX 600, rising 2.3%, with Segro SGRO.L climbing 14.9% after U.S.-based Prologis PLD.N took its $16.6 billion bid public as the UK warehouse landlord rejected it. 
The tech sector .SX8P rose 0.5% after posting its biggest single-day drop in nearly five months in the previous session, as memory stocks in Asia rebounded, with South Korean shares .KS11 rallying 3.3%. 
Chipmaker Infineon IFXGn.DE rose 1.4%, and chip-equipment suppliers BE Semiconductor BESI.AS and ASML ASML.AS added 0.9% and 1.4%, respectively.
The peace agreement between the U.S. and Iran has led to a fall in oil prices, with Brent crude trading at early-March levels on hopes that tankers stranded will move out of the Strait of Hormuz following a deal. However, caution prevailed amid disagreement on the key terms. 
Investors awaited Germany's closely watched Ifo business climate survey, due later in the day, for fresh clues on the health of Europe's largest economy.

        Traders were also watching for cues on the monetary policy path for major global central banks, as they priced in another 25 basis point rate hike by the European Central Bank by year-end, according to LSEG-compiled data.

     

 (Reporting by Utkarsh Hathi and Johann M Cherian in Bengaluru; Editing by Mrigank Dhaniwala)
 ((utkarshtushar.hathi@thomsonreuters.com))