Europe close: Stocks end on mixed note, German issues drag

23 February 2021

(Sharecast News) - European shares finished on a mixed note on Tuesday, as disappointing company earnings in Germany pulled the continent's benchmark index lower.



"Investors are cautiously optimistic about the rise in US bond yields and what that tells us about inflation trajectories, while German shares seem to be weighing on the wider European market as tech stocks weaken further with the DAX being a tech-focused index," said CMC Markets analyst Michael Hewson.

The pan-European Stoxx 600 index slipped 0.42% to 411.32 and the German Dax was down 0.92% to 13,864.81.

Yet the UK's FTSE 100 ended up 0.21% at 6,625.94, based on hopes of a post-Covid economic recovery, while Spain's Ibex 35 broke fresh ground to the upside, advancing 1.72% to 8,252.1.

Yields on Germany's benchmark Bund meanwhile edged up two basis points to -0.31%.

In the UK, the unemployment rate hit 5.1% for the first time since 2016, although this was offset by a rise in the average earnings index for the three months to December to 4.7% from 3.7%.

Travel and leisure stocks remained the main gainers after Monday's announcement from the UK government on a gradual easing of restrictions starting in March, with overseas holidays looking a prospect later in the year.

The news prompted a surge in holiday bookings, with easyJet reporting a jump in summer ticket sales, particularly in August, sending the company's shares 4.5% higher.

Upper crust owner SSP was the standout gainer, with shares soaring 17.02%.

Airline group IAG, TUI Travel as well as Premier Inn owner Whitbread and were also higher, while aircraft engine maker Rolls-Royce, which is paid by the number of hours its engines fly, also gained.

Intercontinental Hotels Group was the odd man out, surrendering early gains and dropping 2% after posting a sharp decline in full year revenues. Aeroports de Paris and Frankfurt Airport operator Fraport were also higher.

BP and Royal Dutch Shell gained as crude oil prices hit 13 month highs with Brent crude oil adding 0.89% to $65.82 a barrel on the ICE.

On the downside, shares in German commercial cooking appliance maker Rational AG slumped 9% as it reported a cautious start to the year, saying the unpredictability of easing or tightening restrictions "is additionally unsettling many customers" with hotel and restaurant customer groups are especially hard hit.

German packaging firm SIG Combibloc was also lower, despite posting a rise in full-year net income.

HSBC Holdings shares dipped after Europe's biggest bank reported profits fell by more than a third due to the Covid-19 pandemic, while it unveiled a revised strategy focused mainly on wealth management in Asia and said it was scrapping its return on equity target.