Europe close: Shares dip despite big gains for cyclicals
European shares finished lower at the start of the week, although gains for cyclicals helped to offset weakness in the more interest rate-sensitive areas of the market.
Thus, rising bond yields and inflation kept a lid on sentiment despite the increased pace of Covid vaccine rollouts.
The pan-European Stoxx 600 index was 0.44% lower at 413.06, alongside a 0.31% dip for the German Dax to 13,950.04 and a loss of 0.55% to 23,009.18 on the FTSE Mibtel.
"Some of Friday’s selling has leaked over into the new week, but in general the moves to the downside appear to have been contained once again," said IG chief market analyst Chris Beauchamp.
"Even the bond yield trade has lessened to an extent; bond traders can hardly be faulted for their excitement however, since after years of declining yields the prospect of a change is bound to cause some ruckus, and it is this that has hit equity markets of late."
At the sector level, Basic Resources (2.76%), Banks (2.09%), and Travel&Leisure (1.97%) all clocked in with big gains.
In Germany, business sentiment improved in February despite the Covid-19 lockdown, according to a survey released on Monday by the Ifo Institute.
The business climate index rose to 92.4 from an upwardly-revised 90.3 in January, beating expectations for a reading of 90.5.
Britain’s FTSE 100 was 0.18% lower to 6,612.24 as the government prepared to release details of its planned path out of Covid-19 lockdowns.
Weekend reports suggested schools would re-open from 8 March, while people will be able to meet outside in groups of six from 29 March, just in time for Easter.
Investors were also eyeing a speech from European Central Bank President Christine Lagarde’s on stability, economic co-ordination and governance in the EU later in the day.
In equity news, shares in security firm G4S fell 9.81% as Canada’s GardaWorld declared its improved 235p-per-share offer as final.
CMC Markets analyst Michael Hewson said the news about GardaWorld had disappointed those shareholders who were holding out for a better offer than the 245p-a-share offer from rival Allied Universal.
Pub group Mitchells & Butlers surged even after saying it had been burning up to £35m in cash a month since the start of the year as it launched a £351m placing to bolster its balance sheet from the coronavirus pandemic.
IAG was in focus after saying it had boosted total liquidity by £2.45bn, via a loan deal and deferred pension deficit payments to help it weather the pandemic.
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