U.K. stocks rise as pound gets slammed
European stocks on Monday closed lower for a fifth straight session, after French utility Electricite de France SA issued a profit warning, and on concerns about Brexit weighing on growth prospects for the eurozone.
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Markets also appeared rattled by uncertainty surrounding progress for a cut in U.S. taxes.
What markets are doing: The Stoxx Europe 600 fell 0.7% to end at 386.13 for its lowest close since Sept. 27, according to FactSet data. On Friday, the regional benchmark fell 0.4% (http://www.marketwatch.com/story/european-stocks-veer-toward-worst-week-since-august-2017-11-10) and closed out last week by falling 1.8%, the biggest weekly percentage loss in three months.
France's CAC 40 gave up 0.7% to end at 5,341.63, and Germany's DAX 30 index slipped 0.4% to finish at 13,074.42.
The U.K.'s FTSE 100 on Monday fell 0.2% to end at 7,415.18.
The euro traded at $1.1657, down slightly from $1.1665 late Friday in New York. Against the pound, the shared currency fetched GBP0.8901, up from GBP0.8843 on Friday.
Read:Is British leader Theresa May on her way out? Why that's the fear--and why it matters (http://www.marketwatch.com/story/is-british-leader-theresa-may-on-her-way-out-why-thats-the-fear-and-why-it-matters-2017-11-09)
What's moving markets: Investors are beginning to wrap up the European earnings season. Per-share earnings in the third quarter have modestly beaten expectations, while sales have been weaker than earnings because of currency moves, said Morgan Stanley, which issued its final earnings monitor for season on Monday.
"How long can markets keep rallying on that? Especially when we seem to be in a global cycle of potentially pulling back on liquidity," by central banks, said Kathleen Brooks, research director at City Index, in a telephone interview.
Investors monitored broad-based gains for the euro, which can clip sales for European exporters in overseas markets and, in turn, pressure shares in those companies.
The pound dropped against the dollar, the euro and other currencies, although it was off session lows. Sterling fell after The Sunday Times reported (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjJwKegh7vXAhVD2KQKHX25AqkQqUMILDAB&url=https%3A%2F%2Fwww.thetimes.co.uk%2Farticle%2Ftory-turmoil-as-40-mps-say-may-must-go-kkg3w6l89&usg=AOvVaw0P3ydYgZ0X_1ThNri40pNZ) that 40 lawmakers in the British parliament had agreed to sign a letter of no confidence in Prime Minister Theresa May. That's eight shy required to start a formal leadership challenge, according to the report. May's troubles on the domestic front make it more difficult for her to fortify the U.K.'s hand in Brexit talks with the European Union, analysts have said.
Check out:Is British leader Theresa May on her way out? Why that's the fear--and why it matters (http://www.marketwatch.com/story/is-british-leader-theresa-may-on-her-way-out-why-thats-the-fear-and-why-it-matters-2017-11-09)
Opinion:Brexit hard-liners are selling England by the pound (http://www.marketwatch.com/story/brexit-hardliners-are-selling-england-by-the-pound-2017-11-09)
The eurozone economy would suffer along with the U.K.'s if there's a "disruptive" Brexit, an official at the International Monetary Fund told Reuters on Monday. (https://uk.reuters.com/article/uk-britain-eu-imf/imf-says-europes-growth-more-durable-warns-of-disruptive-brexit-threat-idUKKBN1DD0WZ)
(https://uk.reuters.com/article/uk-britain-eu-imf/imf-says-europes-growth-more-durable-warns-of-disruptive-brexit-threat-idUKKBN1DD0WZ)Adding to overall pessimism in both U.S. and European markets was uncertainty surrounding prospects for Republican lawmakers to pass tax cuts and other reforms into law by the end of this year, said City Index's Brooks.
"There was a lot of expectation going into this week that would be see a big development in the U.S. tax reform [process]. When Europe came in today, they wanted to know something and they haven't had any information," she said. That prompted traders to say, "That's it. Right. Sell," she said.
Financial shares were among the worst performing on Monday in Europe, likely because of worries about tax reform, said Brooks.
She also noted that over the past three sessions, Wall Street's so-called fear index has climbed to levels not seen since early September.
"The last time we spiked significantly above 12, we spiked to 16 in August when we saw that fear about the Trump trade," ramp up, said Brooks. "I think that's maybe starting to build again."
Stock movers: EDF (EDF.FR) tumbled 10% after the company cut its 2018 Ebitda target (http://www.marketwatch.com/story/edf-shares-tumble-after-company-cuts-guidance-2017-11-13) to a range of EUR14.6 billion to EUR15.3 billion, compared with a previous forecast of at least EUR15.2 billion. EDF said it faces "unfavorable developments" in France and the U.K. The shares were facing their worst decline since December 2016.
Sonova Holding AG (SOON.EB) slid 2.4% after the hearing aid producer said first-half sales came in at 1.25 billion Swiss francs, which was below a Reuters consensus forecast of 1.29 billion francs.
Coca-Cola HBC shares fell 4.5%. The bottler's rating was cut to neutral from overweight at J.P. Morgan Cazenove, according to Dow Jones Newswires.
Aggreko PLC (AGK.LN) rose 1.8% after the power-equipment supplier named Heath Drewett as its chief financial officer (http://www.marketwatch.com/story/aggreko-appoints-heath-drewett-as-cfo-2017-11-13).
(END) Dow Jones Newswires
November 13, 2017 12:42 ET (17:42 GMT)