European shares sluggish as poor updates add to macro gloom

LONDON: European shares were sluggish on Wednesday as a batch of poor corporate updates added to worries about a global growth slowdown and China-U.S. trade negotiations.

The STOXX 600 ended down 0.1 percent, having wavered in and out negative territory throughout the session. After a broadly negative start the index turned higher to rise as much as 0.4 percent before paring gains again.

After hitting two-year lows last month, the STOXX 600 has regained some ground so far this year with investors lured back by cheap valuations, although uncertainties remain over how long the rebound could last.

"I'm not so sure that this rebound is sustainable, without more positive newsflow, be corporate or on the US-China trade dispute front," said Stephane Ekolo, equity strategist at Tradition Securities.

Top faller on the STOXX 600 on Wednesday was Metro Bank , which fell nearly 39 percent to an all-time low.

The British lender announced a sharp rise in exposure to higher-risk mortgages and said profits would be hit by slowing growth, raising fears of a shareholder cash call.

A profit warning by Ingenico sent the French payment group down more than 13 percent to six-year lows.

ASML Holding, a major supplier to the world's largest computer chipmakers, fell as much as 4.8 percent after it said sales would be weak in the first quarter as some of its customers had delayed orders into the second half of the year.

Its shares, which hit their lowest level since Sept 2017 earlier this month, recovered to end up 0.9 percent.

"ASML has unwound the recent PE multiple expansion, and sits right on the long term trend.  Risk/reward on ASML feels fairly neutral right now - a hold in essence. But... opportunities are elsewhere," said Neil Campling, co-head of the global thematic group at Mirabaud Securities.

The autos sector was among the biggest losers on worries about trade negotiations between the Trump administration and the Chinese government ahead of high-level talks next week.

European retailers rose 1.6 percent to seven-week highs after supermarket groups Carrefour and Ahold Delhaize posted trading updates and gained 6.9 percent and 3.2 percent respectively.

RPC Group rose 4.4 percent after Apollo Global Management agreed to buy Europe's biggest plastics packaging maker for 3.3 billion pounds in cash after months of talks.

Doubts about global growth highlighted by the International Monetary Fund cutting its 2019 outlook continue to weigh on stock markets.

"Profits growth will clearly decelerate this year, and market expectations are probably still too high, but we don't see a meaningful downturn developing any time soon", wrote Paul Quinsee, global head of equities at J.P. Morgan Asset Management.

European companies listed on the STOXX 600 index are set to report an average 4.8 percent rise in earnings per share (EPS) in the fourth quarter, a decrease from the 6 percent expected last week, according to I/B/E/S Refinitiv.