European Stocks Inch Up With Retailer Gains Tempered by Oil Drop

(Bloomberg) -- European equities ended slightly higher, as question marks over progress on U.S. pandemic relief talks and Brexit, softer-than-expected macroeconomic data and a slump in oil prices largely offset a surge in retailers.

The Stoxx Europe 600 Index closed up 0.2% in London. It erased an advance of as much as 0.9%, with energy shares slumping as crude futures slid on a challenged demand outlook and higher supplies. Retailers and utilities outperformed.

Shares pared gains alongside U.S. peers after a report that House Speaker Nancy Pelosi sounded skeptical of reaching a deal with Treasury Secretary Steven Mnuchin on a stimulus package. Meanwhile, U.K. and European Union negotiators are still locked in talks in Brussels, with uncertainty over whether will be able to progress toward a trade deal, people familiar said.

Global political issues are aplenty, with professional forecasters raising the probability of a Joe Biden victory at next month's election following the first debate earlier in the week. Elsewhere, statistics Thursday showed U.S. manufacturing expanded in September by less than forecast.

“This week seems to be mostly about the ongoing strong liquidity backdrop as well as the rising odds of a Democratic ‘clean sweep' and the very large spending programs this may bring in 2021,” Gerry Fowler, investment director at Aberdeen Standard Life Investments, said by email.

“As these drivers fluctuate through October, we must also adapt to rising virus cases, slowing growth and an earnings season that will bring greater focus to the 2021 profits outlook,” Fowler said. With three months of 2020 to go, European shares are down about 13% after a rebound from the depths of the pandemic faltered.

Among the biggest individual share moves, Bayer AG declined 13% after the agriculture and pharma giant issued a profit warning late Wednesday.

Rolls-Royce Holdings Plc dropped 10% after laying out plans to raise as much as 5 billion pounds ($6.5 billion) in new financing, while Hennes & Mauritz AB gained 6.1% after revealing plans to close about 5% of its stores next year.

Cargotec Oyj, a Finnish company that handles cargo, rose 21% after agreeing to combine with lift-maker Konecranes Oyj, which added 13%.

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