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European shares steady as firmer banks offset weaker auto stocks

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European stocks were steady on Wednesday as a rebound in the shares of the region’s struggling banks, such as HSBC and ING, offset weaker auto stocks.

The pan-European STOXX 600 index, which had fallen in the last two sessions, was up 0.1 per cent. The index, which plummeted in times immediately following Britain’s vote in June to quit the European Union, is down 8 per cent so far in 2016.

“Earnings have not been too bad, but I remain bearish on the markets. A lot of companies in Europe are beating estimates, but if you look at the results, most of the companies are not actually growing their sales or profits,” said Terry Torrison, managing director at Monaco-based McLaren Securities.

Volkswagen shares fell 1.5 per cent after the company warned of a hit to its sales in China next year, while tyre maker Continental fell after its results came in below some market forecasts.

The STOXX Europe 600 Autos index fell 1.1 per cent, the weakest sector in Europe.

Swiss money manager GAM also slid 14.7 per cent after posting lower profits, but other financial stocks fared better, with the STOXX Europe 600 banks index rising 1.7 per cent.

The banking index has fallen around 30 per cent so far in 2016, hit by concerns over bad debts and weak balance sheets.

However, the sector put in a rare day of outperformance on Wednesday, helped by strong gains for HSBC, ING and SocGen.

Paul

The author Paul