European Equity Benchmarks Close Mixed; Investors Favor Retailers, Shun Energy Stocks

The broad-based major European indices closed mixed in Thursday trading as the continental markets rose, while the London exchanged moved lower.

In economic news, the Organization for Economic Co-operation and Development (OECD) reported that composite leading indicators (CLIs), which are designed to anticipate turning points in economic activity, are pointing to easing growth momentum in the euro area as a whole, including the UK, Germany, France and Italy.

Meanwhile, rents in the UK continue to rise as supply of new properties to let dropped again, according to a survey by the Royal Institution of Chartered Surveyors (RICS). The July survey said that rents could increase 15% over the next five years. It also showed the continued reduction of new property being put on the market in the lettings sector with 22% more respondents expecting a fall rather than rise in New Landlord Instructions. It is the eighth consecutive quarter in which this indicator has recorded a negative number, said RICS.

“The impact of recent and ongoing tax changes is clearly having a material impact on the Buy to Let sector as intended,” said Simon Rubinsohn, RICS chief economist. “At the present time, there is little evidence that either is likely to make up the shortfall. This augers ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”

In Germany, local courts reported 1,616 business insolvencies in May, a decline of 8.4% compared with the same month last year, according to The Federal Statistical Office (Destatis). The local courts reported that, in relation to the business insolvency requests, the prospective debts owed to creditors amounted to approximately EUR1.9 billion ($2.2 billion) in May.

In France, the number of overnight stays in tourist collective accommodation throughout metropolitan France was up 2.1% in Q2, compared to the same period last year, according to the Institute for Statistics and Economic Studies (INSEE). INSEE said that the number of overnight stays was about 9% higher than the 2014/2015 average.

In equities, telecommunications giant BT led the FTSE lower in London, falling 4.6%, followed by insurance firm Direct Line Insurance, which dropped 2.6%, while travel company TUI, and construction materials supplier CRH each closed 2.5% lower. Oil and gas companies BP and Royal Dutch Shell were down 2.1% and 1.9% respectively, while mining company Rio Tinto was off 1.8%.

In Frankfurt, footwear and apparel retailer Adidas lifted the DAX into positive territory as it surged 9.4% higher, followed by industrial gases company Linde, and postal services provider Deutsche Post, which were up 0.8% and 0.7% respectively. Real estate firm Vonova gained 0.6%, while tire maker Continental, and natural gas and electricity provider E.ON each closed 0.5% higher.

In Paris, luxury goods companies helped nudge the CAC higher as Kering, Hermes International, and Louis Vuitton were up 1.8%, 1.7%, and 1.2% respectively. Facilities management services provider Sodexo led all gainers, rising 1.9%, while media company Vivendi, and aerospace and defense firm Safran moved 1.2% and 0.8% higher respectively.

The FTSE fell 0.45%, the DAX gained 0.34%, and the CAC-40 edged 0.01% higher.