European shares reverse losses as insurers shine, yields fall

By Shashwat Chauhan

(Reuters) -European shares reversed earlier losses on Wednesday, helped by a jump in insurers after positive results from British firms Aviva (LON:) and Admiral Group (LON:) and by easing bond yields.

The pan-European advanced 0.2%, after closing at its lowest level in more than a month on Tuesday.

European insurers added 0.5% as Admiral Group jumped 8.0% after the British motor and home insurer posted a marginal rise in its first-half pre-tax profit.

Aviva rose 2.4% after the British insurer posted an 8% rise in first-half operating profit.

Dipping bond yields also helped gains, with German 10-year bond yields coming off a five-month peak.

Meanwhile, data showed British inflation slowed, as expected, in July to its lowest annual rate since February 2022, although there were more signs of pressure in core and services prices.

UK’s blue-chip was largely subdued. ()

“The way people are positioned is definitely for U.S. and European inflation to come down rather rapidly, albeit to remain above central banks’ targets in the next six to 12 months,” said Julien Lafargue, chief market strategist at Barclays (LON:) Private Bank.

“The UK is facing the most challenging outlook when it comes to inflation because, taking into consideration some very specific issues, I would say that the UK is facing the aftermath of Brexit.”

European luxury firms regained some ground as shares of LVMH added 0.5% after falling for three straight sessions.

Retailers extended gains to a third session, rising 0.8%.

The STOXX 600, weighed down by signs of slowing growth in China, has underperformed its U.S. peers this year, with its roughly 7% gain well below the near 16% jump in the .

European shares had opened lower after data showed new home prices in China fell for the first time this year in July, the latest in a string of downbeat data that has kept investors on edge.

Second-quarter earnings for European firms are expected to decrease 4.6% from a year earlier, slightly less than the 4.8% drop estimated last week, data from Refinitiv IBES showed.

Italian stocks were the only outlier, down 0.4% as traders returned from a public holiday on Tuesday.

Balfour Beatty (OTC:) fell 4.2%, to the bottom of the STOXX 600, after its CEO said the infrastructure firm is facing challenges in its U.S. office projects.

A flash estimate of euro zone second-quarter GDP is expected later in the day.