Fading trade fears support European shares; M&A, earnings in focus

LONDON (Reuters) – European shares inched up in early deals on Thursday, as dealmaking gathered pace and fears of a trade war faded, although some disappointing earnings updates weighed.

The pan-European STOXX 600 <.STOXX> edged up 0.1 percent by 0830 GMT, with defensive sectors leading the way while oil and materials stocks weighed.

Merger and acquisition news drove big stock moves.

Spanish construction firm ACS rose to the top of the STOXX, up 9.3 percent after reports it was in talks with Italy’s Atlantia to break up Abertis in an effort to avoid a bidding war for the highway concessions company.

Atlantia, which confirmed preliminary talks with ACS over Abertis, shares also gained 3.8 percent, while Abertis fell 3.9 percent.

Meanwhile Renault shares fell to the bottom of France’s CAC 40 <.FCHI> after the French government said it wasn’t prepared to sell its stake in the carmaker.

The stock had touched its highest since Dec 2015 on Wednesday after Reuters reported Nissan was in talks to buy the French government’s stake.

Earnings took their toll on some stocks.

French supermarket Casino dropped 5.8 percent after its results, with traders pointing to disappointing free cash flow and earnings figures.

Hugo Boss shares fell 4.9 percent after the German fashion house struck a more cautious tone on profit as it kept up investment in revamping stores and its website.

Boskalis Westminster sank 10.6 percent, the worst STOXX 600 performer, after the construction and engineering firm reported full-year earnings and said it would be a “challenge” to match 2017 results.

Outside the large-cap space, UK estate agency Countrywide sank 21 percent after it reported a 22.5 percent drop in full-year earnings, bruised by poor performance in its main sales and lettings business.

(Reporting by Helen Reid, Editing by Danilo Masoni)