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London stocks drag Europe lower as Glencore, oil stocks weigh

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08/06/2020 | 10:40am EDT
FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt

European equities declined on Thursday as London stocks were sapped after Glencore scrapped its dividend and oil stocks slid, while investors kept a close eye on Washington for progress on U.S. stimulus.

The pan-European STOXX 600 index closed 0.7% lower, with London's FTSE 100 falling 1.3% and the German DAX down 0.5%.

Europe's mining index, which rallied earlier this week, shed 2.5% after Glencore became the first major mining company to scrap its dividend and said that it would prioritise cutting debt.

Its shares slumped 8.1%, while energy majors BP, Royal Dutch Shell and Total fell between 2% and 3.8% after strong gains on Wednesday. [.L]

Wall Street indexes were largely flat, stalling near record levels as U.S. Democrats and White House officials struggled to work out a stimulus package for the coronavirus pandemic-stricken economy.[.N]

"Progress has been made but doubts are creeping if a deal will be reached before another week passes," Edward Moya, a senior market analyst at Oanda wrote in a note.

London's exporter-heavy FTSE 100 also took a hit from a stronger pound after the Bank of England (BoE) saw no immediate case to cut interest rates below zero even as it said the economy would take longer to recover from its COVID slump than it previously forecast. [GBP/]

"This is another positive signal at a time of still considerable uncertainty," said Chris Bailey, European strategist at Raymond James. "Conditions are still extremely difficult, and subject to negative revision, but today they have seen a chink of light."

German stocks posted relatively small losses as engineering group Siemens rose 1.6% after forecasting a modest improvement in orders and revenue in the months ahead.

Adidas gained 1.9% as it expects a rebound in profits in the third quarter.

Among the fallers, French insurer AXA slid 3.5% after it dropped its 2020 earnings target and said it would not make additional payouts to shareholders in the fourth quarter.

UniCredit was down 3.9% as it vowed to stay out of a possible merger wave in Italy after reporting higher than forecast quarterly results.

Lufthansa slipped 1.2% after saying it did not expect air travel demand to return to pre-crisis levels before 2024.

Of the 65% of the STOXX 600 companies that have reported results so far, nearly 60% have exceeded dramatically lowered estimates, Refinitiv Eikon data shows.

By Sruthi Shankar

Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS AG 4.42% 283.8 Delayed Quote.-6.21%
AXA 0.86% 15.774 Real-time Quote.-37.71%
DAX 0.39% 12642.97 Delayed Quote.-4.94%
DEUTSCHE LUFTHANSA AG 1.58% 7.564 Delayed Quote.-54.63%
GLENCORE PLC -0.72% 170.86 Delayed Quote.-26.87%
LONDON BRENT OIL -0.65% 41.49 Delayed Quote.-36.88%
RAYMOND JAMES FINANCIAL -1.64% 69.09 Delayed Quote.-21.31%
ROYAL DUTCH SHELL PLC 0.05% 11.394 Delayed Quote.-56.48%
SIEMENS AG -0.60% 112.34 Delayed Quote.-3.02%
STOXX EUROPE 600 0.55% 359.53 Delayed Quote.-14.02%
STOXX EUROPE 600 NR 0.55% 790.12 Delayed Quote.-12.45%
WTI -0.56% 39.468 Delayed Quote.-35.32%
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