European shares edge lower as healthcare losses overpower earnings-fuelled rally

By Shristi Achar A and Shashwat Chauhan

(Reuters) -European shares ended marginally lower on Thursday, as losses in healthcare heavyweights offset gains spurred by strong corporate updates from consumer staples stocks like Unilever (LON:ULVR) and luxury major Kering (LON:0IIH).

The pan-European STOXX 600 index closed 0.1% lower after rising as much 0.3% during the day.

The personal and household goods index led advances among sectors, lifted by a 7.1% advance in British American Tobacco (LON:BATS), after the tobacco giant said it's "actively working" to sell some of its shareholding in India's ITC, as investors cheered a move towards resuming share buybacks.

Adding to the sector's gains, Unilever rose 3.2% after the Dove soap maker launched a 1.5-billion-euro share buyback programme and posted a rise in fourth-quarter sales.

Kering added 4.9% after the French luxury group posted fourth-quarter sales in line with estimates, with analysts noting "no major negative surprises" in its results.

Other luxury heavyweights such as LVMH (EPA:LVMH), Hermes and Richemont (LON:0QMU) rose between 1.8% - 3.3%.

"Reaction has been broadly positive, it's not been a bad earning season (so far)," said Chris Beauchamp, chief market analyst at online trading platform IG.

"Despite the ECB's reluctance, if we could see couple of judicious rate cuts, then that just helps to induce things up ... things are tough, but we can see the light at the end of the tunnel.

Limiting gains on the benchmark STOXX 600, heavyweight healthcare stocks dropped 1.9%, dragged by a 6.4% fall in AstraZeneca (NASDAQ:AZN) after the British drugmaker missed quarterly profit estimates.

Maersk was also a massive drag, down 14.7%, after the shipping giant said that container shipping over-capacity would hit profits more than expected this year.

Peer Hapag Lloyd's shares slumped 9.2%.

Oil and gas shares also took a hit from the 11.9% drop in Neste after the Finnish biofuels producer posted fourth-quarter operating profit below expectations and forecast a lower 2024 renewable products sales margin than last year's.

Amongst other movers, Adyen soared 21.3% to the top of the benchmark index after the Dutch payments company beat 2023 earnings expectations.

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Deutsche Pfandbriefbank (PBB) sought to reassure investors that it has enough funds to cope with a downturn in the U.S. commercial real estate market. Shares of the German lender ended 0.8% lower.

Meanwhile, two key European Central Bank policymakers said the central bank still needs more evidence that inflation is heading back to its 2% target before it can cut interest rates, even if there is growing confidence that price pressures are easing.