European Stock Markets
British shares were mixed on Monday as weak results from Reckitt Benckiser (RB.L) underlined the murky growth outlook for big consumer goods makers.
Convenience retailer McColls (MCLSM.L)
tumbled 5.6 percent after it said supply disruption caused by the
collapse of wholesaler Palmer & Harvey had dented its sales.
Banks extended last week’s gains on the back of rising bond
yields. A sustained recovery in lending rates from historic lows would
boost their profits -- the U.S. 10-year Treasuries yield rose to a
four-year high last week.
The UK's top share index .FTSE
was little changed at 7,296 points at 1000 GMT, with Reckitt and other
consumer staples makers the biggest drag on the FTSE, offset by gains in
banks and in energy producers after oil prices hit their highest in
nearly three weeks.
Activity was relatively muted due to market holidays in China and the United States.
Reckitt
fell the most, down 5.7 percent. The maker of Durex condoms and its
peers Unilever and Nestle have all disappointed with their quarterly
results updates, hit by signs that they are struggling to maintain the
pace of top-line growth.
Some investors say prices of
their branded goods now look unsustainably high compared to the “private
labels” of big retailers.
European consumer staple
stocks .SCOST have fared worse only than telecoms .SXKP over the past
six months as those concerns combined with a rise in bond yields that
could eventually dim the appeal of their stable dividends.
UK
shares last week recovered part of the declines suffered in a sharp
sell-off earlier in the month that was driven by rising bond yields.
Many investors took the declines as an opportunity to buy
shares in big UK-based multinational companies as the global growth
picture still appears strong.
JPMorgan strategists advised investors a week ago to add to their global equity holdings and reiterated the view on Monday.
“We
still believe that the correlation between bond and equity prices
remains firmly inverse, i.e. that equities will tolerate higher yields,”
they said in a note.
