European shares slip as weak oil weighs on energy, mining

LONDON: Stocks sensitive to the price of oil fell Tuesday, putting pressure on European shares, with the pan-European benchmark ending lower after a strong start. Eurozone blue chips closed 0.4 percent lower and the regional STOXX index fell 0.6 percent, retreating from a two-week high and giving up most of the gains made in the previous session.

Europe’s oil and gas companies fell more than 2 percent with Royal Dutch Shell down 2.3 percent and BP down 2.6 percent after oil prices hit seven-month lows. Mining shares fell more than 3 percent.

“People are once more paying attention [to] the fundamentals and the heavy oversupply that we’re seeing on the oil market, and that’s really causing some downside pressure,” said Jonathan Roy, advisory investment manager at Charles Hanover Investments.

Britain’s FTSE 100 index, the worst-performing major benchmark in Europe this year, fell 0.7 percent, hit by its heavy weighting in commodities stocks.

“Investors across Europe are taking cue from the downside we’re seeing in London and, looking at the quite heavily overbought conditions that we’re seeing in Europe, are taking that as a cue to take some money off the table,” Roy added.

Aside from the slide in oil-related stocks, Germany’s Prosiebensat 1 was a bright spot, after it sold its online travel agency Etraveli to CVC. Germany’s benchmark DAX index touched a fresh record high before retreating 0.6 percent.

“We are slightly surprised that the company did not sell a group of travel assets, but management suggests the rest of the travel portfolio remains under review,” they added.

Among the stocks falling the most was Groupe Eurotunnel, which runs Eurostar trains; the shares fell 6 percent after the second broker downgrade in as many weeks. Barclays cut the company to “sell,” citing slowing traffic and recent militant attacks, which could weigh on tourism.

Broker action also took Domino’s Pizza shares to fall 6.5 percent to 16-month lows. Investec began its coverage of the stock with a “sell” rating, saying that it expects like-for-like growth to slow.

Shares in British services office provider IWG were the biggest fallers, down more than 7 percent after founder and CEO Mark Dixon sold down his stake.

A version of this article appeared in the print edition of The Daily Star on June 21, 2017, on page 4.




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