Luxury group Kering’s shares fell 6.1%  after it announced a more-than-expected drop in sales.

Reuters/London


Company earnings depressed Europe’s regional stock indexes yesterday, with the luxury sector dragging on the market.
Luxury groups Richemont and Kering were among the worst performers after Richemont warned its net profit for the year would drop by 36% and Kering’s sales dropped by more than expected.
Kering fell 6.1% while Richemont weakened by 1.1%. Finnish elevator company Kone also slumped 6% after warning of uncertainty in its main China market and posting weaker than expected profits.
British supermarket operator Tesco also fell after reporting its worst ever loss.
Tesco’s shares had initially risen as much as 2.4%, with some traders expressing relief at Tesco’s determination to restructure its business, but the stock then lost ground as more pessimism set in, with one major institutional investor saying that the results were as ugly as feared.
Kering was among the worst performers on the pan-European FTSEuro first 300 index, which was down by 0.3% at 1,623.39 points by the middle of the trading session.
“I’m short on the markets here. There are a lot of negative factors coming together, such as the weak earnings and the ongoing worries over Greece,” said Clairinvest fund manager Ion-Marc Valahu.
Shut out of bond markets, Greece is on the verge of bankruptcy and could run out of cash in weeks unless it strikes a deal with foreign creditors to unlock further bailout aid.
The Athens stock market rose 2.1% yesterday after the European Central Bank (ECB) raised its emergency funding cap for Greek banks to €75.5bn, according to a source, but some traders remained wary about Greece.
“With no chance of a deal at Friday’s Eurogroup meeting in Riga, Greece has missed its latest chance to show genuine intent in regards to reforms, leaving it friendless, penniless and pretty much hopeless,” said Spreadex analyst Connor Campbell.
Among standout gainers, shares in Volvo jumped 15% after the company named the head of Volkswagen-owned Scania as its chief executive.
In spite of the pullback yesterday, the backdrop of a weak euro and monetary stimulus from the European Central Bank’s bond-buying scheme has fuelled investor demand for equities.
Germany’s DAX remains near record highs while the FTSEurofirst 300 is also near its highest level in more than 14 years. The FTSEurofirst has risen 19% so far this year.
“We are generally quite bullish on western Europe at the moment here, and have been buyers in particular of German and French equities,” Sanlam Securities’ head of execution trading Mark Ward said.