European shares eke out gains as healthcare, telecom stocks rise

By Shashwat Chauhan

(Reuters) -European shares inched higher in early trading on Monday, led by advances in defensive sectors including healthcare and telecoms, while falls in miners on concerns over China’s embattled property sector kept gains in check.

The pan-European edged 0.1% higher, bouncing back from a decline of over 1% in the previous session.

Healthcare stocks gained 0.2%, with Philips jumping 5.4% to the top of the STOXX 600 after Dutch investment firm Exor (OTC:) NV took a 15% stake in the company. Exor dipped 0.4%.

The telecoms index rose 0.6%, boosted by Deutsche Telekom (OTC:) , which gained 1.5%.

Still, the mood remained largely risk-off. The European basic resources sector was down 0.3%, while oil and gas stocks slipped 0.5% as prices of crude and base metals fell on heightened concerns over China’s property sector and a firmer dollar. [MET/L]

China’s Country Garden, the country’s top private property developer, said it will suspend trading in its 11 onshore bonds.

LVMH, the luxury giant with a large exposure to China, shed 0.1%.

“The problem we’ve got is China has been increasingly weighing on market sentiment for a little while now,” said Stuart Cole, chief macro economist at Equiti Capital.

“We had this news about Chinese property … that has prompted fears that we could get some kind of slump or potential crash in China.”

The pan-European STOXX 600 has come off its over one-year highs hit last month as ballooning growth concerns in China and sharp movements in bond yields have pressured equities.

Euro zone bond yields edged higher on the day, with Germany’s benchmark 10-year government bond yield hitting a one-month high. [GVD/EUR]

Commodity-heavy European bourses were seen lagging, with UK’s and Norway’s Oslo SE All-Share Index falling 0.1% each.

Geopolitical issues were also on investors’ minds after a Russian warship fired warning shots on a cargo ship in the Black Sea over the weekend.

A bunch of economic data is slated for this week, including a flash estimate of euro-zone second-quarter GDP data, fresh euro-zone inflation data and British consumer prices data.

Wall Street futures were largely unchanged after Friday’s losses following hotter-than-expected U.S. economic data. [.N]

Among other gainers in Europe, Siemens AG (OTC:) rose 0.8% after Berenberg upgraded the German engineering and technology group to “buy” from “hold”.