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European Shares Ease as Auto, Luxury Stocks Take a Knock

  • Germany to end e-vehicle subsidy programme
  • OCI tops STOXX after agreeing to sell IFCO for $3.6 bln
  • Vodafone up as Iliad offers to merge Italian units
  • ECB governors see no dovish pivot before March, cut before June

Dec 18 (Reuters) - European shares slipped on Monday after strong gains last week as automobile and luxury stocks fell, while comments from major central bank officials tamped down bets of early interest rate cuts.

The pan-European STOXX 600 edged 0.1% lower by 0922 GMT, after logging a five-week winning streak since April as the Federal Reserve's dovish pivot last week boosted rate cut bets.

Automobiles lost 0.9%, with Germany's Mercedes Benz, BMW Group and Volkswagen shedding more than 1% each.

Germany's electrical vehicle subsidy programme is set to end prematurely on Monday after paying out some 10 billion euros since 2016.

Luxury giants LVMH, Richemont and Hermes were also down over 1%, with the broader sector index losing 1.4%.

Swedish financial services provider Nordnet dropped 5.5% to the bottom of STOXX 600 after Barclays downgraded the stock to "underweight" from "overweight", also reducing their price target.

DiaSorin dropped 3.3% after the Italian diagnostics firm issued its 2024-2027 business plan.

Meanwhile, energy was the top sectoral gainer, adding 0.9%, on higher crude prices.

OCI jumped 12.5%, leading gains on the pan-European index, as the Dutch chemicals maker is set to sell its stake in Iowa Fertilizer Company for $3.6 billion.

Vodafone gained 6.4% on Iliad's proposal to merge their Italian businesses, steering a 0.5% rise in telecoms.

Danish shipping company A.P. Moller-Maersk rose 1.2% after Iranian-backed Houthi militants in Yemen stepped up attacks on vessels in the Red Sea.

Ladbrokes-owner Entain gained 5.3% following a Jefferies upgrade to "buy" from "hold", while Raiffeisen rose 1.3% after Ukraine removed the Austrian lender from a blacklist.

Reuters reported ECB policymakers are keen on retaining the higher-for-longer interest rates message until March, making any cuts before June difficult. Policymaker Bostjan Vasle said expectations for rate cut in March or April are premature.

"In Europe, economic activity is stagnating at best and even now the ECB comes across as being reluctant to counter a rate cut, even though a reduction in borrowing costs is clearly needed, given that headline inflation is back within touching distance of its 2% target," said Michael Hewson, chief market analyst at CMC Markets.

For more clues on the state of the global monetary policy cycle, investors will monitor the euro zone's November consumer prices, Japan's central bank decision and the Fed's preferred inflation gauge- personal consumption expenditure for November throughout this week.

Reporting by Khushi Singh and Ankika Biswas; Editing by Rashmi Aich and Saumyadeb Chakrabarty

Source: Reuters

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