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European Equity Benchmarks Close Mixed; Brexit Talks Reach Impasse

The broad-based major European indices closed mixed in Monday trading as investors favored mining, telecommunications, and automotive stocks.

In economic news, Brexit negotiations have hit reached an impasse over the issue of the Irish border, government sources have said, according to BBC News. Talks stumbled over the need for a back-up plan - known as the backstop - to avoid a hard border. UK Prime Minister Theresa May has insisted that any backstop arrangement must apply to the UK as a whole, so not to create a border in the Irish Sea.

Meanwhile, economic forecasting group The EY ITEM Club has lowered its UK GDP growth forecast for both 2018 and 2019 for the second straight quarter, reflecting the elevated risk of the UK leaving the EU without a deal, recent faltering consumer purchasing power, and a clear loss of economic momentum in the eurozone over the first half of 2018.

The group expects UK GDP to grow 1.3% in 2018, down from forecasts of 1.4% and 1.6% in the summer and spring respectively, and 1.5% in 2019, down from from 1.6% and 1.7% in its summer and spring forecasts respectively.

GDP growth improved to 0.6% in Q3 from 0.4% in Q2, spurred by a very strong performance in July, which benefited from the football World Cup and unusually warm weather.

"This would make Q3 2018 the best quarter for growth since Q4 2016," said EY ITEM Club. "However, we predict growth will fall back to 0.3% [quarter-on-quarter] in Q4 2018 and through the first half of 2019."

In Germany, revenue of the overall public budget rose 6.5% to EUR715.4 billion ($829.5 billion) in the first half of 2018 compared with a year earlier, according to the Federal Statistical Office (Destatis), while expenditure increased 3.5% to EUR688.6 billion. Destatis also reported that, as defined in public finance statistics, this was a cash surplus of EUR26.8 billion in the first six months of 2018, compared to the first half of 2017, when the surplus had been EUR6.3 billion euros.

In equities, mining stocks led the FTSE higher in London, as Randgold Resources and Fresnillo rose 5.2% and 4.1% respectively, while Rio Tinto and Glencore gained 1.7% and 1.6%. Bookmaking company Paddy Power Betfair climbed 4.6%, while telecommunications operator BT Group, and pharmaceutical firm GlaxoSmithKline increased 2.8% and 2.4%.

In Frankfurt, automaker Volkswagen led the DAX into positive territory, climbing 3%, followed by pharmaceutical companies Bayer and Merck, which were up 2.6% and 2.5% respectively. Deutsche Telekom, and health care company Fresenius rose 2.1% and 1.7% while industrial gases company Linde closed 1.4% higher.

In Paris, airplane manufacturer Airbus, and luxury goods company Kering led the CAC lower, falling 2.4% and 2.3% respectively, followed by software firm Dassault Systemes, which dropped 1.9%. Aerospace and defense firm Safran, lost 1.2%, while spirits distributor Pernod Ricard closed 1% lower.

The FTSE rose 0.48%, the DAX gained 0.78%, and the CAC-40 edged 0.02% lower.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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