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Luxury majors slide on profit taking
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EZ business growth solid in May, shows signs of easing
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Julius Baer slumps as money inflow update disappoints
May 23 (Reuters) - European shares fell on Tuesday, knocked down by losses in luxury majors and a weak update from Swiss wealth manager Julius Baer, while investors were also vigilant of economic data from the region and the U.S. debt ceiling deadlock.
The pan-European STOXX 600 index closed 0.6% lower, logging its steepest one-day percentage fall in three weeks.
The STOXX Europe Luxury 10 tanked 4.3%, its steepest single-day fall since mid-December, as investors took profit after a stellar run for the sector amid signs of weakening demand in United States.
Deutsche Bank said it was time for investors to be "more selective" on luxury stocks, citing signs of softening U.S. growth and despite robust China momentum and a resilient European market.
LVMH, Europe's most valuable company, fell 5.0% having gained nearly 23% so far this year. Peers Hermes and Kering dropped 6.5% and 3.0%, respectively.
"You may expect the weaker economic outlook in the U.S., Europe and China to have an effect on consumer spending on these (luxury) goods, with markets moving towards more conservative portfolio building," said Daniela Hathorn, senior market analyst at Capital.com.
Meanwhile, Republicans in the U.S. House of Representatives
said
they were making little progress in negotiations with the White House over raising the debt ceiling, while facing a default risk in as soon as nine days.
Further, data showed
euro zone business growth
remained resilient in May, but slowed slightly more than expected as the bloc's dominant services industry lost a little of its shine and the downturn in the manufacturing sector deepened.
The STOXX 600 ground to a more than one-year high last week and the German DAX hit records as upbeat earnings and signs of a resilient euro zone economy offset concerns of a potential U.S. recession and debt deal standoff in Washington.
Out of the 269 STOXX 600 companies that have reported first-quarter earnings so far, 65.8% have beaten estimates, against the standard 53%, according to Refinitiv data.
A
Reuters poll
showed fading policy headwinds could see the main benchmarks reach new highs next year, with a few bumps in the road like concerns over recession and sticky inflation.
Among stocks, Julius Baer slid 7.4% to the bottom of the STOXX 600 after reporting modest money inflows in the first four months of the year, disappointing investors anticipating a benefit from Credit Suisse's troubles.
Vivendi fell 3.6% on news that controlling shareholder Vincent Bollore sold shares in the French media group. (Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Sherry Jacob-Phillips, Arun Koyyur and Chris Reese)
