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Earnings weigh on European stocks, sterling lower before Brexit votes

[October 22, 2019] By Tom Arnold

LONDON (Reuters) - European shares edged lower on Tuesday as talk of progress in China-U.S. trade talks was offset by mixed corporate earnings, while sterling retreated ahead of another vote on Brexit.

The broad European STOXX <.STOXX> slipped 0.3%, and MSCI's world equity index, which tracks shares in 47 countries, was flat at 0.02% lower.

French speciality minerals company Imerys <IMTP.PA> slipped 6% after cutting its outlook for 2019, and Norway's Aker BP <AKERBP.OL> moved marginally lower as it slashed its full-year oil output target.

British household goods maker Reckitt Benckiser <RB.L> was stranded at the base of the STOXX index with a 5% fall after it cut its full-year sales forecast for the second time this year.

In Switzerland, drugmaker Novartis <NOVN.S> raised its 2019 target and reported better-than-expected revenue, while Apple supplier AMS <AMS.S> climbed 6% as demand from smartphone makers boosted operating profit.

Shares of UBS <UBSG.S> led gains among banking stocks <.SX7P> after Switzerland's biggest bank reported a smaller than expected loss in quarterly profit.

Swedish defence firm Saab <SAABb.ST> gained 7% to lead the STOXX 600 after reporting third-quarter operating earnings well ahead of market forecasts and affirming its view that operating cashflow this year would improve versus 2018.

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Financial traders work at their desks at CMC Markets in the City of London, Britain, April 11, 2019. REUTERS/Peter Nicholls

"This week is an important week for earnings," said Andrew Milligan, head of global strategy at Aberdeen Standard Investments. "We've seen a lot of talk on Brexit and trade talks and the new news is the earnings and the signal they give for the future. We've broadly priced in that earnings will be slightly positive for the year, but everyone is seeing how monetary policy stabilises the situation."

E-Mini futures for the S&P 500 <ESc1> slipped 0.14%.

TRADE TALKS, BREXIT VOTES

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> added a modest 0.4%, with a holiday in Tokyo keeping turnover light.

China and the United States have achieved some progress in their trade talks, Vice Foreign Minister Le Yucheng said on Tuesday, adding that as long as both sides respected each other, no problem could not be resolved.

U.S. President Donald Trump sounded upbeat on a China deal on Monday, while White House adviser Larry Kudlow said tariffs on Chinese goods scheduled for December could be withdrawn if talks go well.

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