Sanofi buying biotech firm for $11.6 billion
Europeans stocks searched for firm direction Monday, held back by a slide in shares of bookmakers and in Swiss lender UBS AG, while investors cast an eye toward Washington where the government overseeing the world's largest economy was heading into a third day of a shutdown.
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What are stocks doing?: The Stoxx Europe 600 index darted between tiny gains and losses. It was up less than 1 point at 400.97, sticking close to Friday's close (http://www.marketwatch.com/story/european-stocks-rise-as-industrial-tech-shares-help-put-weekly-win-in-sight-2018-01-19) that marked the benchmark's highest since early August 2015, according to FactSet data. Last week, the pan-European gauge rose for a third consecutive week.
Germany's DAX 30 index was up 5 points at 13,439.87, following Friday's 1.2% rally that left the gauge at with its highest close since November.
France's CAC 40 shed 2 points to 5,524.36, while Spain's IBEX 35 picked up 0.4% to 10,519.40.
The U.K.'s FTSE 100 index was up 0.1% at 7,738.30.
The euro bought $1.2266, up from $1.2220 late Friday in New York.
What's driving markets: Politics remained firmly in the spotlight as investors also juggled a fresh round of corporate financial updates. The euro advanced against the U.S. dollar as the U.S. government remained in shutdown mode. Saturday's closure came after the Republican-led Senate late Friday couldn't reach a deal over immigration issues.
Euro strength can hurt sales of products made by European exporters and hurt shares of those companies.
The euro had been choppy earlier after members of Germany's center-left Social Democratic Party on Sunday voted to formally begin coalition talks with German Chancellor Angela Merkel's conservative party. Merkel has been trying to craft a ruling coalition since September's election.
From the corporate front, UBS said it will take a roughly charge of nearly 3 billion Swiss francs stemming from the U.S. tax overhaul. Shares of the firm fell Monday.
A potential driver for markets this week is the European Central Bank, which will release its latest policy decision on Thursday. The euro in recent sessions has been kicked up to 3-year highs versus the greenback on the prospect the central bank will soon shift to a hawkish tone toward its ultra-loose monetary policy.
What strategists are saying: "Given that only 56% of the SPD's voted in favor of the talks, the rejection of a final coalition deal remains a risk that's likely to keep the euro capped for now," said Hussein Sayed, chief market strategist at FXTM, in a note.
"The pressure on Democratic and Republican leaders to end the stand-off is intense, so market participants are watching for any sign cracks in Democrats' resolve on immigration status for 'Dreamers'. The deal on the table is only a 'stop gap' though. It will fund spending till early February. That means a breakthrough could be treated as hollow by markets," said Ken Odeluga, market analyst, at City Index, in a note.
Stock movers: William Hill PLC (WMH.LN) tumbled 13%, falling alongside other bookmakers after a Sunday Times report (https://www.thetimes.co.uk/article/2-limit-to-curb-crack-cocaine-of-gambling-ftc6v37hr) that the U.K. government is set to limit the stake on betting shop terminals to GBP2, down from GBP100, in an effort to curb gambling problems.
Ladbrokes Coral Group PLC (LCL.LN) sank 10% and GVC Holdings PLC (GVC.LN) , which is purchasing Ladbrokes, dropped 3.9%.
"Gambling companies have made hundreds of millions of pounds a year from fixed odds betting terminals and were hoping that the minimum stake would be towards the middle of the GBP2 and GBP50 consultation range," said Rebecca O'Keeffe, head of investment at Interactive Investor, in a note.
Shares of Paddy Power Betfair PLC was off 0.3%, paring a bigger loss earlier in the session.
UBS (UBS) fell 1.8% after the Swiss bank swung to a fourth-quarter net loss of 2.22 billion francs ($2.3 billion) (http://www.marketwatch.com/story/ubs-swings-to-loss-after-hit-from-us-tax-reform-2018-01-22-54854634), slightly larger than a net loss of 2.15 billion francs expected by analysts. The swing was led by a write-down of roughly 2.9 billion francs ($3.01 billion) of deferred tax assets stemming from tax reforms in the U.S. UBS did say it would launch a 2 billion franc share buyback program over three years, beginning in March.
Ocado Group PLC (OCDO.LN) rallied 14%, with the company saying it will develop an online-grocery business for Canadian food retailer Sobeys Inc (http://www.marketwatch.com/story/ocado-to-create-online-grocery-business-for-sobeys-2018-01-22).
Sanofi SA (SAN.FR) fell 2.9% after the French pharmaceuticals maker said it will acquire Bioverativ Inc (http://www.marketwatch.com/story/sanofi-to-acquire-bioverativ-for-116-billion-2018-01-22-24852329).(BIVV) for $11.6 billion. Bioverativ focused on therapies for hemophilia and other rare blood disorders.
Barclays PLC (BCS) rose 2.9% following a Financial Times report (https://www.ft.com/content/e768ce1e-fd54-11e7-9b32-d7d59aace167) that U.S. hedge fund Tiger Global has invested more than GBP1 billion in the London-based lender.
In Madrid trade, Siemens Gamesa Renewable Energy SA (SGRE.MC) rose 1.9%, saying a series of contracts it's signed in India (http://www.marketwatch.com/story/siemens-gamesa-india-pacts-a-sign-of-recovery-2018-01-22)signals a turnaround in the market after several months of weakness.
(END) Dow Jones Newswires
January 22, 2018 06:53 ET (11:53 GMT)
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