Retailers Advance European Shares

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On Wednesday, European shares advanced after their slow start this year as retail stocks were mainly responsible along with the attention from the launch of the new MiFID financial market rules.

The pan-European STOXX 600 index showed gains of 0.3 percent at 0925 GMT, while euro zone blue chips increased by 0.2 percent. Germany’s DAX recorded gains of 0.4 percent and Britain’s FTSE 100 ended flat as a stronger pound held it down.  Even though the gains in industrial, healthcare and technology companies held up the indexes, trading was projected to be muted following the holidays as well for the initial day for European Union’s new market rules to take effect.

With minimal news, the shares of British retailer Next increased by over 7 percent bringing it to the top of the STOXX, following the company’s increase of profit guidance due to its Christmas sales being better than previously expected.  Next is the initial major listed retailer to provide updates regarding Christmas trading, but its positive news also pushed up its peer Marks & Spencer by 1.4 percent.

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“As much as (Next‘s) update is good news, the constant update-by-update tinkering of guidance and sharp reactions by the share price just goes to show how shareholders are at the mercy of UK consumer trends and whims,” said Mike van Dulken, head of research. “The retail sector is a very tricky one.”

Europe’s retail index gained 0.7 percent, although it dropped 3 percent last year  Shares in Steinhoff, the furniture retailer, was the biggest gainer at 12.8 percent.  Europe’s energy sector added to its gains from its previous session with a 0.7 percent improvement, propped up by stronger oil prices. Shares in semiconductor maker AMS also were upbeat, improving 2.7 percent following solid gains in the previous session.


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As for declines, the STOXX 600 shares in builder Carillion dropped 3.8 percent following Britain’s markets watchdog launched a probe into the company.

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