April 18, 2016 / 4:36 PM / 2 years ago

European shares shrug off Doha deal failure to end higher

* FTSEurofirst 300 edges up 0.4 pct

* TUI leads travel stocks higher after upgrade

* Autos also gain, with BMW up

* Caixabank falls after launching bid for Banco BPI (ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development)

By Alistair Smout and Danilo Masoni

LONDON/MILAN, April 18 (Reuters) - European shares recovered on Monday after a weak open, with auto and travel stocks gaining and the energy sector off its lows after a meeting by major exporters in Doha collapsed without a deal to freeze output.

A deal to freeze oil output by OPEC and non-OPEC producers fell apart on Sunday after Saudi Arabia demanded that Iran join in despite calls on Riyadh to save the agreement and help prop up crude prices.

The failure to agree a deal put pressure on the oil and gas sector, with the STOXX Europe Oil and Gas index slipping 0.2 percent, although oil had trimmed its steepest losses by the close.

The pan-European FTSEurofirst 300 index touched its lowest intraday level since Wednesday, before turning higher to trade up 0.4 percent at 1,355.26 by the close, following U.S. shares up in afternoon trade.

The index remains over 13 percent off of lows hit in February, after concerns over a slump in oil prices and China’s growth knocked European stocks back nearly 20 percent in the first few weeks of the year.

“Although we reacted to the downside on the news yesterday, the broader market has recovered,” said Atif Latif, director of Guardian Stockbrokers, referring to the OPEC meeting.

“The overall market is starting to absorb this news more easily than we have seen over the last few months, despite volatility in oil and gas shares.”

The rise up from the day’s lows was aided by stocks that benefit from a low oil price.

Travel and leisure stocks rose 0.5 percent, helped by the fall in crude prices as oil is a major input cost for airlines and tour operators.

Travel operator TUI was the leading gainer in the sector. It was last up 2.3 percent after Berenberg upgraded the stock to buy from hold.

“TUI continues to deliver a superior performance within its tour operation business. This is reflected in a stronger top-line evolution and also it has had a superior cash generation for shareholders,” analysts at Berenberg said in a note.

Auto stocks also rose, up 1.5 percent and the top sectoral gainer. BMW was up 2.6 after Goldman Sachs upgraded its rating on the stock to “buy” from “sell”.

Spain’s Caixabank tumbled 3 percent after it said it was making a fresh takeover offer worth around $1 billion for the 56 percent of Portuguese lender Banco BPI that it does not already own.

Chipmakers such as ARM Holdings and Dialog Semiconductor fell 3.8 percent and 3.3 percent respectively.

Traders linked the drop to a report in the Nikkei business daily saying that tech giant Apple will continue its reduced production of iPhones in light of sluggish sales..

Today’s European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA.

Editing Tony Jimenez

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