Europe midday: Shares lower as investors fret over Brexit talks impasse
European shares fell as investors fretted over the possibility of a no-deal Brexit and increased tensions between the US and China.
The pan-European Stoxx 600 index was down 0.39%, while the UK FTSE 100 gained as Brexit worries hammered the pound, benefiting the index’s exporters. Reports suggest the UK was ready to walk away from talks "within hours".
"It is in the economic interest of both sides to broker a deal but doesn’t seem likely at the moment. Sterling is in the firing line because of the nerves surrounding the standoff, and that is the reason why the FTSE 100 is outperforming against its eurozone counterparts," said CMC Markets analyst David Madden.
"International stocks like British American Tobacco, AstraZeneca, Unilever, Diageo and Imperial Brands are all helping the index. Those companies benefit from the slide in sterling as they earn a large portion of their revenue overseas."
While most of the Brexit focus has been on the fishing industry, largely insignificant in terms of its economic weight, the main sticking point appeared to be over divergence from EU rules in any future trade relationship. France indicated it was happy for the UK to have some room to manoeuvre but only if there was a sanctions regime in place if Britain moved too far.
There was also investor concern after a report from Asia overnight that the US was ratcheting up tensions with China and preparing to hit more Beijing officials with sanctions over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong.
Shares in Micro Focus surged 15% after Goldman Sachs upgraded the software company to ‘buy’ from ‘neutral’ and hiked the price target to 650p from 335p. The stock rocketed at the end of last week after Amazon named it as one of the businesses approved to help companies move computer mainframes onto Amazon Web Services (AWS).
Games Workshop rose as the miniature wargames maker declared a dividend of 60p a share as the upgraded its first-half profit forecast for the third time in three months.
Frasers Group lost ground after confirming it was in talks with administrators of retail chain Debenhams on a potential rescue, but warning that "time is short" to do a deal.
In equity markets, housebuilders tanked on Brexit concerns, with Berkeley, Persimmon, Barratt, Vistry and Bellway all sharply lower.
Shares in Italian luxury group Moncler rose 5% as the company said it would buy Stone Island in a two-step acquisition deal giving its smaller rival a company value of €1.15bn.