Europe midday: Shares pare gains with BHP, defence stocks in focus

(Sharecast News) - European shares pared morning gains to be hovering near the flatline on Monday as investors mulled BHP's decision to walk away from a bid for mining rival Anglo American, the latest diplomatic efforts to end the war in Ukraine and a weak German business sentiment survey. The pan-regional Stoxx 600 index was up 0.03% at 562.42 by 1207 GMT. Germany's DAX rose 0.57%, Britain's FTSE 100 gained 0.22% and France's CAC 40 was flat.

Mining titan BHP confirmed it was no longer pursuing a takeover of Anglo American that had threatened to wreck the latter's $57bn merger with Teck Resources.

BHP said a potential tie-up with Anglo, which would have created the world's largest copper producer, still was attractive, but stated that it was no longer considering a combination.

"Whilst BHP continues to believe that a combination with Anglo American would have had strong strategic merits and created significant value for all stakeholders, BHP is confident in the highly compelling potential of its own organic growth strategy," the company said in a statement on Monday.

With the Thanksgiving holiday this week ahead of the stampede that is the Black Friday sale, investors will turn their attention to whether the US Federal Reserve will cut interest rates next month amid fears of an artificial intelligence valuation bubble and unclear picture of the jobs market.

"Although AI and tech valuations were the main driver of markets last week, it is notable that sentiment started to recover on Friday after the Fed's John Williams said that he would support a rate cut next month," said XTB research director Kathleen Brooks.

"He is second in command to Jerome Powell, so Williams' words carry weight with investors since his comments are usually made with the tacit agreement of the Chair. Considering there is no framework to assess the current state of the US economy, these comments will likely have a big impact on the market."

In equity news, defence stocks were on the slide as talks in Geneva to end Russia's unprovoked attack on Ukraine continued after heavy criticism of a US plan that appeared to have been heavily influence by Moscow. A new proposal has been put forward with the Americans claiming progress had been made.

Henk, Hesoldt, Rheinmetall, Babcock, Saab and Leonardo all fell on the news.

Bayer surged after its stroke-prevention drug showed positive results in a late-stage trial.

In economic news, German business sentiment unexpectedly deteriorated in November, according to a survey released on Monday by the Ifo Institute.

The business climate index fell to 88.1 from 88.4 in October, missing expectations for a reading of 88.5. The current situation index printed at 85.6 in November up from 85.3 the month before, while the expectations index dipped to 90.6 from 91.6.

Reporting by Frank Prenesti for Sharecast.com