European shares end little changed after Brexit speech

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17/01/2017 17:47

* Pan-European index down 0.1 pct 
    * FTSE makes biggest one-day drop since June 2016 
    * Bank index ends flat after see-saw session 
    * Utilities lead sectoral gainers 
    * Lufthansa surges on reports of Etihad talks 
 
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    By Danilo Masoni 
    MILAN, Jan 17 (Reuters) - European shares ended flat on 
Tuesday, coming off lows after British Prime Minister Theresa 
May provided some clarity on her country's plans to leave the 
European Union. 
    The pan-European STOXX  .STOXX  index ended 0.1 percent 
lower, having fallen as much as 0.7 percent just before May 
began speaking. Britain's FTSE 100  .FTSE  index fell 1.5 
percent, its biggest one-day drop since June 2016, as  sterling 
surged on May's speech. 
    Concerns over a "hard" Brexit had been weighing on the pound 
in recent weeks, helping the FTSE end at all-time highs on 
Monday after a record 14 straight days of gains.     
    In a much-awaited speech that had been extensively leaked to 
media, May said Britain would leave the EU's single market but 
promised a parliamentary vote on any deal and stressed it would 
seek to stay a key European partner  urn:newsml:reuters.com:*:nL5N1F727C.  
    "The fact that May is willing to put the final Brexit deal 
vote to the Parliament reinforces the possibility of a `softer' 
Brexit," said Stephane Ekolo, a strategist at Market Securities. 
    Deutsche Bank said it viewed the speech as moderately 
positive for markets following weekend headlines signaling a 
hawkish stance on immigration and relaxed attitude towards EU 
tariffs. "Nevertheless, it is not a game changer," it said. 
    Europe's banking index  .SX7P  ended little changed 
following a volatile session that saw it move from being one of 
top sectoral losers in Europe to a top gainer. 
     Within the sector, performances were mixed. Spain's Banco 
Popular  POP.MC  rose 6.6 percent after an upgrade to "buy" from 
Citigroup. UniCredit  CRDI.MI  gained 2.7 percent as Italian 
banks were underpinned by an upbeat note from Goldman Sachs. 
    "Since the Italian referendum, market repair has 
accelerated: while the stock of non-performing loans at banks is 
likely to take time to revert to average levels, a series of 
announcements by banks should be positive steps towards market 
repair," Goldman said in a note. 
    Elsewhere in the sector, top losers were HSBC  HSBA.L , 
Natixis  CNAT.PA , down 1.9 and 1.6 percent respectively.     
    European banks and other cyclical stocks have rallied 
recently, helped by a rise in yields fuelled by hopes of fiscal 
stimulus and regulation cuts in the United States under Donald 
Trump. 
    But some investors said signs were emerging that the Trump 
rally was unwinding. Utilities, which have fallen out of favour 
since Trump's election, were the biggest sectoral gainer on 
Tuesday, up 0.7 percent. 
    Lufthansa  LHAG.DE  rose as much as 7.3 percent, attracting 
interest after an Italian newspaper reported Etihad Airways was 
interested in taking a stake in the German carrier.  
    The stock ended off highs, up 4.3 percent, after two sources 
familiar with the matter said Lufthansa was in talks with the 
Abu Dhabi-based company  urn:newsml:reuters.com:*:nL5N1F72LU. 
    Basic resources stocks  .SXPP  remained weak, down 0.6 
percent, hurt by lower copper prices. Anglo American  AAL.L , 
BHP Billiton  BLT.L  and Rio Tinto  RIO.L  all fell around 2 
percent. 
    German fashion retailer Zalando  ZALG.DE  fell the most on 
the biggest STOXX, down 6 percent after its sales growth fell 
short of expectations  urn:newsml:reuters.com:*:nL5N1F716E.  
 
 (Additional reporting by Helen Reid; Editing by Larry King) 
 ((Danilo.Masoni@TR.com; +39-02-66129734; Reuters Messaging: 
danilo.masoni.thomsonreuters.com@reuters.net)) 
 
Keywords: EUROPE STOCKS/