* STOXX 600 down 0.3 pct, weighed down by banks

* Swiss financial institution UBS drops after underwhelming outcomes

* Tesco rallies on Booker acquisition

* Index posts weekly achieve on M&A, earnings, Trump increase (Updates costs at shut)

By Kit Rees and Danilo Masoni

MILAN, Jan 27 European shares pulled again on Friday with UBS dragging financial institution shares decrease after posting a drop in full-year revenue, whereas Britain’s largest grocery store Tesco surged after a 3.7 billion-pound takeover deal to purchase a provider.

The pan-European STOXX 600 index was down 0.3 p.c at its shut, whereas the UK’s FTSE 100 rose 0.3 p.c, supported by Tesco, which soared 9.3 p.c after agreeing to purchase wholesale provider Booker in a deal that cements its dominant place within the UK.

Booker shares hit a report excessive and had been the highest STOXX gainer, up virtually 16 p.c.

“At first glance Tesco’s merger with Booker makes perfect sense. Tie up the end-to-end wholesale/retail business and make savings in the process,” mentioned ETX Capital analyst Neil Wilson.

Investors additionally cheered the information that the UK grocery store expects to restart paying dividends once more.

UBS, nevertheless, fell 4.5 p.c. The world’s largest wealth supervisor posted a 47 p.c fall in 2016 web revenue however struck a extra optimistic tone for 2017 as its fourth-quarter web revenue got here in properly forward of market expectations.

Baader Helvea analyst Tomasz Grzelak mentioned UBS delivered a strong replace because of very sturdy funding banking outcomes, however outflows at its wealth administration operations upset.

“Considering that the … negatives are to be seen as phasing out in 2017, the results support our buy rating,” he added.

Losses in UBS helped drag Europe’s financial institution index down 0.eight p.c, to be among the many weakest sectors.

UniCredit fell 5.2 p.c after a report mentioned the Italian lender might begin its multi-billion-euro capital hike on Feb. 6.

In spite of Friday’s weak point, the STOXX 600 stays near its highest stage in a couple of yr and ended the week with a achieve of round 1 p.c. The surge displays assist from merger and acquisition exercise, optimism over U.S. President Donald Trump’s growth-boosting insurance policies and an excellent begin to the earnings season.

According to JP Morgan, 59 p.c of the STOXX corporations which have reported to date beat earnings per share estimates, with progress operating at 11 p.c year-on-year, whereas greater than two thirds beat income forecasts.

Among different optimistic updates on Friday, Finnish ship engine and energy plant maker Wartsila climbed 7.2 p.c, buoyed by stronger than anticipated outcomes.

Among the largest losers of the day was on-line lottery agency Zeal Network. Its shares tumbled greater than 24 p.c with merchants citing disappointment over its dividend plans and a below-consensus steering. (Reporting by Kit Rees and Danilo Masoni; Editing by Elaine Hardcastle)

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