European shares trade sideways, Just Eat and Lufthansa shine

LONDON - 12 October 2017: European shares traded sideways in morning deals on Thursday despite new highs in Asia and on Wall Street, with financial shares being the biggest burden and Just Eat the top performer after its merger with Hungryhouse got provisional clearance.

At 0840 GMT, the pan-European STOXX 600 index was up 0.01 percent with no clear direction across the continent.

France’s CAC 40 was down 0.2 percent, Frankfurt’s DAX down 0.1 percent, while London’s FTSE 100 and Spain’s IBEX were up 0.1 percent.

The impact of the political crisis in Spain has softened, with some investors seeing it as an opportunity to buy stocks on the cheap.

“We think the Catalan government’s reservation to immediately declare independence and seek negotiations reduces the tail-risk of a Spanish break-up,” Deutsche Bank analysts wrote in a research note.

“As a result we think Spanish equities are likely to outperform the European market over the coming months.”

Other analysts caution that things could get worse before getting better.

Spanish Prime Minister Mariano Rajoy on Wednesday gave the Catalan government eight days to drop an independence bid, failing which he would suspend Catalonia’s political autonomy and rule the region directly.

Just Eat posted the best performance of the pan-European index with a 6.4 percent rise to a new record high of 748.5 pence as British competition authorities gave a provisional go-ahead to its acquisition of Hungryhouse.

In Germany, Lufthansa was on top of the local blue-chip index with a 2.7 percent rise after it said it would sign a deal later on Thursday to buy parts of insolvent German carrier Air Berlin.

EasyJet, the other airline that has been negotiating to buy assets from Air Berlin, rose 3 percent.

British wholesaler Booker was up 0.3 percent after it said it expected its 3.7 billion pound takeover by Tesco to complete early next year.

Volkswagen benefited from a rating upgrade from Bernstein and rose 0.6 percent as the broker cited “very attractive” pricing and earnings that would probably rise faster than expected.

Banks weighed on indexes throughout trading centers, with London’s HSBC, France’s BNP Paribas, Spain’s BBVA or the Netherlands’ ING losing between 0.4 and 1.4 percent.

Roche lost 0.3 percent after Novartis - which rose 0.2 percent - decided not to sell its roughly $14 billion stake in the Swiss healthcare company.