European stocks stagnate as Vodafone fall offsets gains in utilities

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  • Vodafone slips on cut to fiscal year guidance, telecoms tumble
  • Ambu drops to STOXX low on cautious outlook
  • U.S. producer price data for October due

Nov 15 (Reuters) – European stocks were nearly flat on Tuesday as a sharp decline in British telecoms group Vodafone, after slashing its full-year forecast, eclipsed gains in the utilities sector.

The Continental STOXX 600 Index (.STOXX) fell 0.05% at 0950 GMT, trading within a range of just two points since the opening bell.

The Utilities Index (.SX6P) was up 1.0%. Drax Group, a UK-based renewable energy producer, led the industry push (DRX.L) with gains of 4.2%, while British Gas owner Centrica (CNA.L) rose by 4.1% after the launch of a share buyback program.

The largest weight on the STOXX 600 index was a 6.9% decline at Vodafone (VOD.L) shares after the company cut its full-year free cash flow forecast and said full-year earnings would be in the lower range of its target.

European Telecoms (.SXKP) were down 0.8%.

Movements in European stock markets were tepid, with analysts pointing to uncertainty ahead of the release of U.S. producer price data for October later in the day and comments from other Federal Reserve officials dampening hopes a pivot of US monetary policy.

Fed Vice Chairman Lael Brainard said on Monday that the U.S. central bank is likely to slow its rate hikes soon, but stressed that “we have additional work to do,” adopting a similar tone to the Fed governor , Christopher Waller.

More Fed speakers are expected to support the same view of small increases for a longer duration, said Chris Beauchamp, chief market analyst at IG Group.

The STOXX 600 has always hovered near 11-week highs, but is still down 11.3% for the year as Eurozone data continues to paint a bleak picture for the economy.

The latest data showed that a flash estimate of the euro zone’s gross domestic product rose in line with expectations during the July-September period. Elsewhere, German investor sentiment rose again in November on hopes that inflation rates will soon fall. Read more

Investors were also awaiting the UK budget on November 17, with expectations of tax increases and spending cuts – aimed at plugging a £50bn hole in UK finances.

“Expectations are quite bleak but I think you will have a government statement that is very cautious and designed to restore market confidence and chart a fairly tough course for the UK,” Beauchamp said.

London FTSE 100 (.FTSE) the index was flat, while the midcap FTSE 250 index (.FTMC) decreased by 0.2%.

Ambu, Danish medical device manufacturer (AMBUb.CO) fell 12.6% to the STOXX 600 low after a cautious outlook for 2022/23.

Reporting by Shreyashi Sanyal in Bengaluru; Editing by Savio D’Souza and Shinjini Ganguli

Our standards: The Thomson Reuters Trust Principles.

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