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European markets edge lower on earnings; autos tumble

Silvia Amaro

European stocks edged lower on Wednesday as investors focused on the latest coming out of the earnings space.

The pan-European Stoxx 600 fell into the red, off 0.25 percent in afternoon trade, with sectors pointing in different directions.

Financials and banking stocks underperformed many sectors Wednesday, on earnings and doubts over U.S. plans to reform the tax system. The French bank Credit Agricole fell more than 4 percent after posting lower net profits.

The Italian bank BPM was halted from trading after falling more than 4.9 percent, Reuters reported, but has since come back online, trading down over 7 percent.

On Wednesday, the European Union proposed tougher car emissions targets, which included a credit system for carmakers to push the rollout of electric vehicles and fines for exceeding carbon dioxide limits; Reuters reported. Autos sank almost 1.5 percent, making it Europe's worst performing sector Wednesday.

Utility stocks fluctuated during trade, but recovered in later trade. Investors have showed concern during the session over regulation on a proposed merger between the British firm SSE and Innogy. They announced earlier that they would merge their British retail energy business. SSE fell into the red, while Innogy pushed higher.

Household goods meanwhile were higher on earnings. In particular, Ubisoft rose over 8 percent after posting second-quarter sales above forecasts.

More earnings shake up sentiment

Marks & Spencer was up over 1 percent after announcing pretax profits slightly above forecasts, though lower from a year ago. The clothing and homeware arm of the British brand struggled, but its food and international business grew.

Retail as a whole outshone with Ahold Delhaize rising 5 percent, after third-quarter earnings beat estimates. Carrefour was also up over 3 percent.

Persimmon dropped 3.5 percent, though the housebuilder said that forward sales beyond 2017 were up 10 percent and it had sold all of its stock for the current year. The British firm acquired more than 5,500 new plots in the third quarter of the year.

Pharmaceutical company Lundbeck sank more than 7.5 percent, hitting the bottom of the STOXX 600, after it posted its latest earnings report. While third quarter operating profit exceeded market expectations, sales of its more recent drugs failed to meet forecasts.

Saudi Arabia

More broadly, investors will monitor developments in Saudi Arabia where an anti-corruption crackdown has led to several arrests of top officials. On Monday, the Kingdom also accused Iran of being behind a ballistic missile attack carried out in Yemen, sparking tensions in the region.

In oil, crude prices ticked lower on Wednesday as US crude stockpiles rise by 2.2 million barrels in the previous week, even thoughts analysts were expecting a decline.

Elsewhere, President Donald Trump told North Korea to avoid making a "fatal miscalculation." The message was delivered as the president continues with his 12-day trip to Asia. Speaking of, U.S. stocks traded under slight pressure as Wall Street looks back at the first year since the U.S. elected Trump.