European shares snap nine-day winning streak as Siemens weighs

German share price index DAX graph is pictured at the stock exchange in Frankfurt

By Ankika Biswas and Johann M Cherian

(Reuters) -European shares snapped a nine-day winning streak on Thursday, weighed by Germany's Siemens after a second-quarter industrial profit miss, while a number of automobile and energy stocks also dropped on trading ex-dividend.

The pan-European STOXX 600 was down 0.2% after hitting a record high on Wednesday, as a lower-than-expected rise in U.S. consumer prices in April boosted bets for a September rate cut by the Federal Reserve, in a boost to global sentiment.

Siemens declined 6.6%, to mark its worst day in over two years, as the group's second-quarter industrial profit fell 2% and missed estimates after a slowdown at its flagship factory automation division.

The stock weighed on Germany's DAX, while the broader industrial goods and services sector lost over 1%.

The automobile sector was the worst-hit, down 1.2%, as Bayerische Motoren Werke and Daimler Truck dropped 6.3% and 5.1%, respectively, upon trading ex-dividend.

The energy sector also fell 1%, with oil major BP shedding 1.5% on trading ex-dividend and Eni losing 2.2% after Italy's Treasury sold a 2.8% stake in the energy group for 1.4 billion euros.

The hopes of lower borrowing costs later in the year have kept the STOXX 600 trading near record highs. Policymakers have hinted at a June rate cut, however the outlook beyond that remains uncertain.

European Central Bank policymaker Martins Kazaks said the ECB is not in a hurry to ease policy, so subsequent moves could be spaced out to give time for assessment.

Nicolo Bragazza, associate portfolio manager at Morningstar Wealth said that as the ECB reduces interest rates, high-dividend paying utility stocks are expected to benefit.

The utility sector has gained 2% year-to-date, underperforming the benchmark STOXX which has added 9%.

Bragazza added that consumer discretionary-related companies along with real estate stocks could see the immediate benefit of lower interest rates, while financials could take a hit as net interest margins narrow.

On the day, the insurance sector topped sectoral gainers, up 1.6%, with Zurich Insurance climbing 3.5% after higher first-quarter property and casualty premiums and Swiss Re jumping 3.8% after first-quarter results beat expectations and news of plans to exit its digital white-label business.

Roche jumped 3.2% after an early-stage trial showed the obesity drug candidate by newly acquired Carmot Therapeutics led to significant weight loss.

Ubisoft slid 13.5% to the bottom of the STOXX, weighed by "lacklustre" guidance and "uneven" FY2024 results, while Sweco soared 15% after first-quarter core earnings beat expectations.

Elsewhere, Sabadell's CEO said the company rejected BBVA's takeover offer because the bidder underestimated the deal's negative effect on capital reserves and overestimated cost savings. Shares of both the Spanish lenders closed down over 2% each.

(Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Nivedita Bhattacharjee, Sohini Goswami and Chris Reese)