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German data props up European shares after two-day sell-off

German data props up European shares after two-day sell-off
FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, August 5, 2019. REUTERS/Staff -
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(Reuters) – European shares were marginally lower on Tuesday, steadying slightly after posting their biggest two-day drop in over 3 years, as upbeat German data soothed some of the nerves around the past week’s escalation of U.S.-China trade tensions.

By 0714 GMT, the pan-European benchmark stocks index STOXX 600 <.STOXX> was down just 0.1% with Britain’s commodity-heavy FTSE 100 <.FTSE> underperforming .

Washington on Monday formally tagged China a currency manipulator for the first time since 1994, responding to Beijing’s allowing of the yuan <CNY=> to weaken past 7 per dollar for the first time in a decade.

Although the yuan steadied on Tuesday after a 2.3% slump in the past three days, analysts saw China’s decision as a signal that it will not back down and that a trade war which is already affecting global growth will only worsen from here.

Against that, however, was data showing German industrial orders were up 2.5% in June from the previous month, the biggest jump since August 2017. Germany’s DAX <.GDAXI> gained 0.3% in response and the German-dominated auto sector <.SXAP> led gains amongst sub-sector indexes.

Earnings in the region were mixed with shares of Deutsche Post <DPWGn.DE> rising nearly 3% after the German post and logistics group affirmed its guidance for the second half of 2019 and 2020. Switzerland’s OC Oerlikon <OERL.S> fell 1.5% after the industrial group cut its 2019 guidance.

In M&A, shares of Germany’s Metro <B4B.DE> slumped 8% after Czech businessman Daniel Kretinsky’s investment vehicle confirmed it would not raise its 5.8 billion euro bid for the German retailer and wholesaler.

(Reporting by Agamoni Ghosh in Bengaluru)

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