European stocks soften on trade tension, White House shakeup

European stocks soften on trade tension, White House shakeup

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LONDON: European and US stocks were mostly lower on Wednesday (Mar 14), relinquishing early gains, as global tensions over trade took their toll on investor confidence.

Political worries sparked by the latest shakeup in US President Donald Trump's administration also prompted selling.

On the economic front, a disappointing US retail sales report for February prompted worries about the health of consumer spending, a big engine for American growth, analysts said.

News that Trump had replaced his moderate secretary of state Rex Tillerson with a foreign policy hawk fanned fears of instability in the White House and a more hardline approach to foreign affairs sent US stocks lower on Tuesday and Asian shares followed early on Wednesday.

'FESTERING UNCERTAINTY'

An attempt on both sides of the Atlantic to claw back ground earlier on Wednesday faltered during the European afternoon amid what Charles Schwab analysts called "festering global trade uncertainty".

Tillerson was replaced by CIA chief Mike Pompeo, who is an advocate of taking a hard line with China on trade and Iran.

"Musical chairs in Washington fuelled fresh concerns of instability within the Trump administration yesterday, adding to fresh worries about Russia on several fronts," said Mike van Dulken, head of research at Accendo Markets.

"Investors, however, are demonstrating new-found thickness of skin following several years of geopolitical surprises ..." he said.

He pointed to positive economic data coming out of China helping fuel gains for shares of heavyweight mining firms listed in London.

Prudential was a star on the British index, up nearly six per cent after the insurer said it would split in two to better serve its regions of operation.

"The London market is being helped along by mining companies, on the back of respectable industrial production figures from China," said David Madden, market analyst at CMC Markets UK.

"Shares in Prudential are up ... after the company revealed plans to demerge," he added.

ADIDAS SPRINT

In Frankfurt, Adidas shot up well over 10 per cent after the German sportswear giant reported higher profits in 2017 on worldwide sales growth and cost savings.

Spanish retail giant Inditex meanwhile climbed more than four per cent after the group posted rising annual profits - outperforming its long-time Swedish rival H&M.

In foreign exchange, the dollar was down versus the euro, the yen and the pound.

"The dollar sell-off can be attributed to the combination of lower (US inflation) and the White House revolving door syndrome that exudes little confidence in the administration," said Stephen Innes, head of Asia-Pacific trading at Oanda.

Official data on Tuesday showed US inflation eased in February, helping to wind back concerns that the Federal Reserve would hike interest rates faster than expected this year.

Key figures around 1640 GMT:

London - FTSE 100: DOWN 0.1 per cent at 7,132.69 points (close)

Frankfurt - DAX 30: UP 0.1 per cent at 12,237.74 (close)

Paris - CAC 40: DOWN 0.2 per cent at 5,233.36 (close)

EURO STOXX 50: DOWN 0.2 per cent at 3,390.98

New York - Dow: DOWN 1.1 per cent at 24,735.00

Tokyo - Nikkei 225: DOWN 0.7 per cent at 21,968.10 (close)

Hong Kong - Hang Seng: FLAT at 31,601.45 (close)

Euro/dollar: UP at US$1.2368 from US$1.2335 at 2040 GMT

Pound/dollar: UP at US$1.3950 from US$1.3905

Dollar/yen: DOWN at 106.16 yen from 106.40 yen

Oil - Brent North Sea: UP 12 cents at US$64.76 per barrel

Oil - West Texas Intermediate: UP 18 cents at US$60.89 per barrel

Source: AFP/de

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