(For a live blog on European stocks, type LIVE/ in an Eikon news window)
* STOXX led lower by banks, energy, tobacco companies
* Defensives provide support, led by media stocks
* Axel Springer hits more than 9-mth high on KKR's offer
(Updates to close)
By Sruthi Shankar
June 12 (Reuters) - Weakness in oil companies and banks halted a
week long rally in European shares on Wednesday, as soft Chinese
factory activity data and Washington's tough stance on trade talks
with Beijing prompted investors to cash in some of June's gains.
Defensive sectors such as media , healthcare
and telecoms helped Europe's pan-regional STOXX 600
bounce off early lows. The index closed down 0.3% before falling as
much as 0.67%.
Also helping to cushion some of the losses were increasing bets of
an interest rate cut by the Federal Reserve as early as next month
after U.S. data showed inflation barely rose in May.
Expectations of looser monetary policy from the major central
banks to counter a global growth slowdown have supported risk assets.
The STOXX 600 had gained 4.5% this month, reversing most of a
sell-off in May that was its worst monthly performance in more than
"The risk rally seems to be running out of steam, and there
appears to be little room for further upside," strategists at
Morgan Stanley wrote.
"Reports suggest both the U.S. and China have done limited
preparatory work for the upcoming G20 leaders meeting as the trade
negotiating teams on both sides have not met since talks ended at an
impasse on May 10. This suggests a reduced likelihood of a trade resolution."
President Donald Trump said on Tuesday he would hold up a trade
deal with China unless it agrees to four or five major points,
reheating tensions between the two sides.
The biggest faller was Europe's oil and gas index , down 2.2%,
as the commodity's price took a hit from an unexpected rise in U.S.
crude inventories and by a weaker outlook for global demand.
Banking stocks , which tend to suffer when expectations for
interest rates fall, lost 1.1%.
London-listed shares of Asia-focused banks Standard Chartered
and HSBC dropped as protests in Hong Kong against an extradition
bill that would allow people to be sent to mainland China for trial
descended into violent chaos.
Italy's FTSE MIB fell 0.7% and its banking index
dropped 1.5% as the European Union moved closer to taking
disciplinary action over the country's growing debt.
Chipmakers, which get a huge portion of their revenue from China,
fell, with AMS AG and STMicroelectronics declining 3.5% and
Axel Springer jumped 11.5% to touch a nine-month high after
funds controlled by U.S. private equity investor KKR
offered to buy out minority shareholders of the German publisher
for 63 euros a share, a 40% premium to its market price.
World's No. 2 tobacco company British American Tobacco
fell 4.4% after it warned of steeper declines in cigarette sales
globally mainly due to waning demand in its main U.S. market
Shares in Belgian retailer Colruyt fell 5.7% to the bottom of
the STOXX 600 after Goldman Sachs put a "sell" rating on the
Dublin's ISEQ , which typically falls on fears of a disorderly
Brexit, ended down 1.5% to post its biggest percentage fall in two weeks.
British lawmakers defeated an attempt led by the opposition Labour
Party to try to block a no-deal Brexit by seizing control of the
parliamentary agenda from the government.
Boris Johnson, the frontrunner for Prime Minister Theresa May's
role, has said he would be willing to take the country out at the end
of October, even if it meant leaving without a deal.
(Additional reporting by Amy Caren Daniel and Susan Mathew in
Bengaluru; editing by Patrick Graham and Jane Merriman)
((Amy.CarenDaniel@thomsonreuters.com ; within U.S. +1-646-223-8780;
outside U.S. +91 80 6749 9250 ; Reuters Messaging: Amy.CarenDaniel.firstname.lastname@example.org;))