Trade pact lifts European shares while Italy extends slide

LONDON: European shares rose Monday as a new U.S.-Mexico-Canada trade pact lifted some of the gloom over global trade, while Italian stocks extended Friday’s slide as top EU officials weighed in on the government’s budget plans. There was no shortage of corporate news to drive the markets either, with Ryanair taking a 12.5 percent dive after a profit warning, Fresenius boosted by a ruling in its favor, and Linde rising on a regulator’s green light for its merger with Praxair.

The eurozone’s top stock index rose 0.4 percent while Germany’s trade-sensitive DAX climbed 0.8 percent. “News overnight of a late agreement between the U.S. and Canada to salvage the NAFTA trade agreement should give a boost to global risk appetite at the start of the fourth quarter,” Peel Hunt strategist Ian Williams wrote, adding the deal “may offer encouragement that the other global trade disputes can be settled satisfactorily.”

Ryanair was the worst performer, down 7.5 percent after it cut its forecast for full-year profit and said there could be worse to come if recent coordinated strikes across Europe continue to hit traffic and bookings.

The fall in Europe’s largest low-cost carrier weighed on the wider sector which fell 0.5 percent.

Peers Easyjet, Air France-KLM and British Airways owner IAG were down 4.1 percent, 2.6 percent and 1.4 percent respectively.

While the overall market gained, Italian shares were still on tenterhooks in the fallout of the government’s decision to increase its deficit target, while Italy’s government bond yields climbed higher.

Starting the day as the strongest gainer, the FTSE MIB reversed course to finish down 0.6 percent with Italian banks extending Friday’s fall by another 3.1 percent.

The Vice President of the European Commission Valdis Dombrovskis said its view was that the Italian budget plans break EU rules.

“Tria went there to reassure but initial comments from Moscovici and Dombrovskis are not positive,” said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan.

Eurozone banks also felt the strain, down another 1.2 percent and the worst-performing sector.

Among gainers, Fresenius shares topped the STOXX with an 8.3 percent gain after a Delaware judge ruled the German health care group could walk away from its $4.75 billion deal for U.S. drugmaker Akorn Inc. and rejected Akorn’s claim that the merger had been breached.

Germany’s Linde jumped 6.2 percent after it received approval for its proposed $83 billion merger with Praxair from the Chinese antitrust authorities.

A version of this article appeared in the print edition of The Daily Star on October 02, 2018, on page 5.




Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (

comments powered by Disqus



Interested in knowing more about this story?

Click here