UKX FTSE 100 Index

By Barbara Kollmeyer, MarketWatch

Pound climbs on Brexit developments

European stocks fell across the board on Monday, with banks and mining stocks leading the downdraft as trade worries resumed. Meanwhile, deal news for Sky PLC and Randgold Resources Ltd. made those the top stock gainers among Stoxx Europe 600 benchmark.

What are markets doing?

The Stoxx Europe 600 slipped 0.5% to 382.47, after Friday's gain of 0.4% (http://www.marketwatch.com/story/europe-stocks-poised-for-best-week-since-july-lifted-by-global-rally-2018-09-21). Last week was also the best weekly gain since March for the pan-European gauge, which rose 1.7%.

Germany's DAX 30 fell 0.6% to 20,519.37, while France's CAC 40 declined 0.4% to 5,472 and the U.K.'s FTSE 100 lost 0.3% to trade at 7,468.02.

The euro was changing hands at $1.1805, higher than late Friday's $1.1749 in New York and the highest level since last June. The pound strengthened to $1.3162 from $1.3080.

Need to know: Time to load up on gold? 'Do the math' (http://www.marketwatch.com/story/time-to-load-up-on-gold-do-the-math-2018-09-24)

What is driving the market?

European Central Bank President Mario Draghi said he expected a rise in consumer prices (http://www.marketwatch.com/story/ecb-president-mario-draghi-expects-vigorous-pick-up-in-underlying-inflation-2018-09-24), news that boosted the euro against major crosses. Earlier in the day, the Ifo business climate index showed that German business sentiment slipped in September.

The pound rose after U.K. Brexit Secretary Dominic Raab dismissed the idea that Prime Minister Theresa May may call a general election in the autumn to salvage her Brexit plan that was rejected by European Union leaders at a summit last week. He said negotiations would go on for her plan in an interview on Sunday, according to reports (https://www.theguardian.com/politics/2018/sep/23/dominic-raab-rules-out-snap-general-election-to-save-mays-brexit-plan).

The pound was pressured late last week as May spoke of a "no-deal" Brexit. Investors will also be watching the Conservative Party conference this week for Brexit-related comments.

Last week was a strong one, but not just for Europe as China stocks logged their best week in over two years and the Dow Jones Industrial Average posted its biggest weekly percentage gain (http://www.marketwatch.com/story/dow-set-for-best-week-since-july-as-stock-futures-imply-deeper-push-into-record-territory-2018-09-21) since July. A grind higher for markets over the past several weeks has come against upbeat U.S. economic data that have allowed investors to ignore intensifying trade tensions.

Read:Perma-bear Albert Edwards warns stocks have 'drunk the Kool-Aid' as recession looms (http://www.marketwatch.com/story/perma-bear-albert-edwards-warns-stocks-are-drunk-on-kool-aid-as-recession-looms-2018-09-22)

But on Monday, the latter was back in the headlines as U.S. tariffs of 10% on $200 billion of Chinese goods kicked in, to which China has retaliated with taxes of on $60 billion worth of U.S. imports. Potentially kicking off a fresh war of words, China accused the U.S. of "trade bullyism" (http://www.marketwatch.com/story/china-accuses-us-of-trade-bullyism-as-200-billion-in-tariffs-kick-in-2018-09-24) and trying to intimidate it and other countries via tariffs in a policy paper published through the state news agency Xinhua.

Stock movers

Sky PLC (SKY.LN) surged 8.7% for the Stoxx Europe's top gainer after U.S.-based Comcast Corp. (CMCSA) said it would pay 17.28 pounds ($22.60 a share) for Europe's biggest pay-TV group. Comcast beat back a combined Walt Disney Co. and 21st Century Fox bid in a blind auction on Saturday (https://www.wsj.com/articles/comcasts-sky-high-bid-to-go-global-1537708890?mod=searchresults&page=1&pos=5).

Randgold Resources Ltd. (RRS.LN) (RRS.LN) climbed 5.8% after announcing an all-share merger deal (http://www.marketwatch.com/story/randgold-barrick-gold-to-create-183b-company-2018-09-24) with Canada-based Barrick Gold Corp. (ABX.T) (ABX.T) to create an $18.3-billion gold-mining giant.

Climbing crude prices underpinned oil stocks, which was the leading sector in Europe for Monday. Total SA (TOT)(TOT) also got a lift, up 1.4%, after reporting a major gas find offshore U.K (http://www.marketwatch.com/story/total-makes-major-gas-find-offshore-uk-2018-09-24). BP PLC (BP.LN) (BP.LN) rising over 1% and Lundin Petroleum AB (LUPE.SK) up over 3%.

What are strategists saying?

"This is just the latest in a series of U.S. takeovers for U.K. companies, with the devaluation in sterling helping drive bargain basement shopping for U.K. firms," said Joshua Mahony, market analyst at IG, in a note to clients, referencing the Sky/Comcast tie-up. " Despite fears over the impact of Brexit, there is clearly sufficient confidence in U.K. firms to grab a bargain as seen with the purchase of Costa coffee by Coca-Cola."

"No fewer than 10 of the firms who were part of the FTSE 100 at the start of the year have since been acquired, received a bid, been involved in a merger, proposed a demerger or made a huge acquisition. The past year to be this busy was 2007," said Russ Mould, AJ Bell Investment Director, in a note to clients.

"The fact that the pros are buying gold and the punters are selling it is interesting--and could suggest that Barrick and Randgold Resources are positioning themselves for an upturn in gold by getting leaner and meaner, even if skeptics of the deal will argue it is a defensive measure prompted by necessity and lean times for their main product," he added.

(END) Dow Jones Newswires

September 24, 2018 09:43 ET (13:43 GMT)

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