European shares end lower, weighed down by carmakers

European shares fell on Friday as automaker Daimler reported disappointing results and said it would investigate its US emissions certification process. Poor sales also hit luxury group Kering, owner of the Gucci brand. The pan-European FTSEurofirst 300 index ended down 0.4 percent, adding to a slight fall in the previous session, although it made a second straight week of gains.
Carmakers were the worst-performing sector. The European auto sector index fell 2.2 percent, dragged down by a 5.1 percent drop in Daimler after it reported first-quarter operating profit tumbled 9 percent. Daimler also said the US Department of Justice had asked it to investigate its emission certification process in United States, including for its Mercedes brand. Rival PSA Peugeot Citroen fell 1.7 percent after it was raided by anti-fraud investigators on Thursday as part of investigations into auto pollutants.
"The main reason that automotive stocks are down today are renewed emission investigations at Daimler, PSA Renault and Mitsubishi. So, as could be feared, the problem seems not to be limited to VW alone," said Patrick Casselman, senior analyst at BNP Paribas Fortis. Volkswagen fell 1.3 percent, off lows, after the company announced a 4.1 billion euros operating loss for 2015. Europe's largest automaker took a 16.2 billion euros hit to pay for its diesel emissions test-rigging scandal.
"Investors should be relieved by the fact that VW has put a number on the financial risk associated with the vast majority of its diesel issues," Evercore ISI said in a note. "Management should now be in a position to more actively address the turnaround plan for the VW brand."
French luxury group Kering was down 5.4 percent after its flagship Gucci brand posted a lower-than-expected rise in first-quarter sales on Thursday. The Kering group's overall first-quarter sales also disappointed. Finnish financial holding group Sampo fell 6.3 percent, the top decliner in the FTSEurofirst 300 index, after its shares traded without rights to its latest dividend payouts.
Shares in Zodiac Aerospace surged 11.1 percent on speculation that Safran was interested in bidding for it, even though Zodiac said it was not for sale. A source close to Safran said an offer for Zodiac was "not on the agenda". Greek shares outperfomed to gain 1.2 percent, as Athens and international creditors moved closer to a deal on reforms that would unlock new loans and pave the way for debt relief.