Europe close: Stocks lower but losses limited after positive start on Wall Street

(Sharecast News) - European stocks finished firmly lower on Tuesday, but erased some losses before the close of play following a positive start on Wall Street. Most major indices finished in the red across Europe, with the Stoxx 600 slipping 1.43 points or 0.28% to 517.30. However, the pan-European benchmark had bounced off its intraday low of 515.40 (-0.64%) reached earlier on.

Selling pressure eased slightly after strong gains from US markets following the opening bell, with the Dow Jones Industrial Average and S&P 500 setting new all-time highs.

"Concerns over weakening demand from China led to a second day of falling retail and mining sector stocks in the UK and Europe as German investor morale worsened for the first time in a year," said Axel Rudolph, senior market analyst at IG.

"On the other side of the Atlantic the S&P 500 and Dow hit fresh record highs despite slowing retail sales as the core metric rose the most since April of last year, pointing to robust consumer spending. An around 95% probability of a September Fed rate cut also contributed to the buoyant mood."

Back in Europe, the economic outlook in Germany deteriorated in July for the first time in a year, according to a survey released by the ZEW Center for European Economic Research. The headline investor expectations index fell 5.7 points from June to 41.8, coming in below expectations for a reading of 42.3. Meanwhile, the current conditions index improved by 4.9 points to -68.9 points in July.

There was also downbeat news from the eurozone where the bloc's trade surplus unexpectedly shrank in May, falling to its lowest level in four months, according to figures from Eurostat. The single-currency region saw a trade balance of €13.9bn in May, following a downwardly revised €14.2bn surplus in April and well below the €17.1bn expected by the market.

Market movers

Shares in Scor tanked by almost a quarter as the French reinsurer issued a profit warning at its life and health business. The stock finished down 24% after the company guided to a loss of €400m for the unit for the second quarter.

UK online grocer and technology group Ocado surged more than 15% after reporting a lower first half loss and raising full-year guidance. It lifted the full year EBITDA margin at its technology solutions division to mid-teens from previous guidance of more than 10% and also forecast underlying cash flow to improve by £150m from £100m.

German fashion house Hugo Boss slid more than 7% after the company downgraded its sales and earnings projections for the year amid diminished consumer demand, particularly in China and the UK. The company said it now anticipated full-year sales to range between €4.2bn and €4.35bn, down from the previously-forecasted €4.3bn to €4.45bn.

Others in the luxury fashion sectors were also under the weather, such as Christian Dior, LVMH, Hermes and Prada. Burberry was also extending losses made on Monday after a downbeat trading update which pointed to a 21% drop in comparable store sales in its first quarter, leading to the exit of its chief executive officer.