Britain's mining stocks tugged the main index lower on Thursday, while shares of IAG and Coca Cola HBC slid as they traded ex-dividend, though several investors stayed on the sidelines during the US market holiday. The FTSE 100 inched 0.1% lower but still hovered around a 10-month high and the FTSE 250 was roughly flat.
"It is perhaps a sign of how much trading has been driven by the US in the last couple of months that the absence of the American markets due to Independence Day left their European counterparts in neutral," Spreadex analyst Connor Campbell said.
British Airways owner International Consolidated Airlines Group skidded 5.9% on its worst day since October 2017. Coca-Cola's leading bottler Coca Cola HBC slipped 6.7%. The slide in stocks trading without a dividend entitlement kept the main index from rising for a fifth straight session even though a softer-than-expected US jobs report overnight spurred hopes of interest rate cuts by the Federal Reserve.
Companies in the United States added more jobs in June, but fewer than analysts had forecast. UK markets have been sensitive to dovish signals this week as expectations of near-term rate cuts by the Bank of England were raised by weak economic data and remarks by Governor Mark Carney. In June, the FTSE 100 had enjoyed its best month since January amid rising hopes that central banks around the world would loosen policy to counter slowing growth.
An index of miners fell 1.4% as copper prices slipped on a jump in London Metal Exchange inventories. Israel-focused gas driller Energean surged 13.7% to an all-time high after saying it would buy the oil and natural gas unit of Italy's Edison SpA. Persimmon, Britain's second-largest homebuilder, shed 1.2% after it posted lower first-half revenue as increased focus on quality and improving customer service slowed order intake.
"The pressures of the step up in customer service continue to weigh on revenues... the question remains of how long until customer service initiatives impact profitability," Jefferies analysts said. Shares of blue-chip rivals Taylor Wimpey and Berkeley gave up 1% each.
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European shares lifted to 12-month high
• Italian banks climb after favourable EU decision
MILAN: European shares closed at their highest in more than a year on Thursday as Italian stocks surged on relief that Rome had avoided European Union disciplinary action and rising expectations of looser monetary policy by major central banks. The pan-European STOXX 600 index rose 0.1%, extending gains to a sixth straight session on optimism that Christine Lagarde will stick to the ECB's dovish stance as the central bank's next chief.
Milan's MIB rose 1% to hit its highest level in almost a year, while its bank index soared 3.4% after Italy persuaded the European Commission that new measures submitted this week would help bring its growing debt in line with EU fiscal rules. While Italy has dodged a bullet for now, disciplinary action could be back on the agenda in the autumn when the 2020 budget is drafted, ING senior economist Paolo Pizzoli said.
"As things stand, crafting a fiscally sound 2020 budget will prove challenging." Trading volumes were thin, with US financial markets shut for Independence Day.
Expectations of lower borrowing costs have helped European equities recover from May's losses and resume their 2019 rally, with the STOXX 600 up more than 16% this year. Meanwhile, trade-sensitive autos sector rose 0.4% on news that top representatives from the United States and China are arranging to resume talks next week.
Also helping the auto stocks were gains in French car parts company Valeo after it won 500 million euros ($564 million) worth of orders for its 'Lidar' sensors. Capping gains were Spanish utilities as Enagas and Naturgy which slipped 4.3% and 3.4% respectively on a media report that Spain's antitrust authority would propose cuts to allowed returns of electricity and gas networks. British Airways-owner IAG and Coca-Cola HBC were the top fallers on the pan-European benchmark index as their shares traded ex-dividend.
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