Europe Stocks Erase Optimistic Start as Defensive Sectors Drop

(Bloomberg) -- European equities erased earlier gains as food and health care shares declined and optimism stemming from China’s monetary easing evaporated.

The Stoxx Europe 600 Index lost 0.4 percent after rising as much as 0.4 percent earlier. Nestle SA dropped 1 percent and Anheuser-Busch InBev SA/NV dropped 2.1 percent after Goldman Sachs Group Inc. cut the stock to neutral. Novartis AG retreated 1.9 percent.

European stocks lost 13 percent in 2018, the worst performance since the 2008 financial crisis, as a mix of political and economic growth concerns pushed investors to exit. Although the People’s Bank of China cut required reserves for banks, softening its policy amid trade tensions with the U.S. and oil heading for its longest rally in more than 17 months, traders’ optimism was fleeting.

Europe Stocks Erase Optimistic Start as Defensive Sectors Drop

Miners, which were battered last year by the U.S.-China trade war, advanced on optimism that growth in China will remain robust.

Citigroup Inc.’s strategists continued to stick with their pro-cyclical stance on bets that there won’t be a recession in 2019. Their key recommended pairs are resources versus industrials, health care versus utilities and banks versus insurance.

The FTSE 100 Index dropped 0.6 percent even as lawmakers called on Theresa May to rule out a no-deal Brexit. The DAX Index retreated 0.4 percent after German factory orders fell more than expected in November.

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