European shares set to extend winning streak on oil surge, weak euro

May 18, 2018

MILAN: European shares dipped in morning trading on Friday but were on course for eight straight weeks of gains, supported by a rally in energy shares and a weaker euro, which helped investors shrug off worries over political risk in Italy.

Earnings updates continued to drive single stock moves.

Richemont fell 7.7 per cent after the luxury goods group posted a net profit that fell short of expectations, while a solid update from Ubisoft sent shares in the France’s biggest video game maker to a record high.

The pan-European STOXX 600 index fell 0.3 per cent but remained near its highest level in more than three months and was up 0.7 per cent on the week, while the FTSE was down 0.1 per cent after hitting a record close on Thursday.

Italy’s FTSE MIB was down 0.2 per cent, set for its second straight week of losses as investors grew wary that a government accord between two anti-establishment parties could reduce fiscal discipline in the euro zone’s third largest economy.

Enel fell 0.6 per cent after Goldman Sachs removed the Italian state-controlled utility from its list of favourite stocks, saying the energy policy plans of the 5-Star and League parties could dent prices.

Italian banks, considered a proxy for political risk in the country due to their government bond holdings, and utilities are seen as most exposed to government polices, while exporters are considered relatively safer.

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