January 17, 2017 / 9:58 AM / 2 years ago

European shares lower ahead of May speech, weighed by miners and carmakers

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By Helen Reid

LONDON, Jan 17 (Reuters) - European shares were dragged lower by miners and carmakers on Tuesday, as markets awaited details of Britain’s Brexit position in a late morning speech by Prime Minister Theresa May.

The pan-European STOXX index was down 0.4 percent, and Britain’s blue-chip FTSE extended its losses, down 0.3 percent.

Uncertainty about Britain heading for a “hard” Brexit was reinforced over the past week, pushing the pound to some of the lowest levels against the U.S. dollar seen in more than three decades.

“I get the sense we are at last entering the territory we thought we would be in in June, and the period of ‘business as usual’ is coming to an end,” said Peter Dixon, economist at Commerzbank.

There were some chinks of light in the pan-European index. Airline carrier Lufthansa soared to the top of Germany’s DAX after an Italian paper reported Saudi telecoms company Etihad was interested in taking an equity stake in it.

Swiss chocolate maker Lindt saw its shares gain 5.2 percent after it succeeded in increasing sales in Europe, Japan and Brazil, facing down headwinds of low consumer confidence.

Basic resources stocks were the biggest sectoral fallers, with the basic resources index down 1.2 percent, dragged down by lower metals prices caused by a stronger dollar with markets spooked over Brexit.

Anglo American, BHP Billiton and Antofagasta were down 1.6 to 1.8 percent. Arcelormittal was the worst-performing stock in the CAC 40.

Shares in German fashion retailer Zalando slumped 6.5 percent after its sales growth disappointed expectations.

Mediaset was down 3.8 percent after a report, without citing sources, said a potential takeover offer for the Italian broadcaster by France’s Vivendi would not be ‘judicially acceptable’ for Italian communications authority AGCOM.

Carmakers took some strain again as U.S. President-elect Donald Trump’s threat to slap import tariffs on cars made in Mexico rippled through the market.

Peugeot was a top faller in France’s CAC index, down 1.6 percent, while German carmakers Volkswagen, Daimler and BMW continued to weigh on the DAX.

Italy’s blue-chip FTSE MIB was the only major European index in positive territory, boosted by an upswing in banks Banco BPM, UBI Banca, BPER Banca and Unicredit.

“Since the Italian referendum, market repair has accelerated: while the stock of non-performing loans at banks is likely to take time to revert to average levels, a series of announcements by banks should be positive steps towards market repair,” a Goldman Sachs note said. (Reporting by Helen Reid, Editing by Vikram Subhedar/Jeremy Gaunt)

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