European Stocks Drop at Open as Lloyds Slides on Earnings Miss

(Bloomberg) -- European equities retreated at the open as investors were disappointed by earnings and as mining shares fell on the stronger U.S. dollar.

The Stoxx Europe 600 Index fell 0.3 percent. Lloyds fell 2.2 percent after the results of Britain’s largest mortgage lender missed estimates. Mining shares were the biggest declining sector amid dollar gains and as BHP dropped 2 percent after Citigroup cut it to neutral, saying it’s reached fair value. Shell was up 0.7 percent in Amsterdam after earnings topped estimates.

Investors continue to analyze earnings reports for signs of strength or weakness of global and European growth. So far, the results have been mixed in Europe, with about 52 percent of companies beating estimates, compared with 76 percent delivering positive surprises in the U.S. CNBC reported that the U.S. and China could announce a trade deal as soon as next Friday, citing sources it didn’t name.

“We’ve been excusing the weakness of European growth for more than a year now, but there has been some evidence from earnings growth at least that expectations have finally fallen to a level where they can be beaten,” said Michael Metcalfe, head of macro strategy at State Street Global Markets. “The question now is whether the macro data will follow suit against what is now a very low bar for expectations."

To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Jon Menon

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