UPDATE 2-European shares gain in first week of 2019 but caution persists


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    * STOXX up 0.3 pct; shares hit one-month high  
    * Oil stocks reverse gains on crude slump
    * China-sensitive autos led fallers

 (Updating prices, adding comment)
    By Julien Ponthus and Josephine Mason
    LONDON, Jan 11 (Reuters) - European shares closed higher on
Friday after hitting one-month highs as investor appetite for
assets considered risky remained firm, despite caution over
trade and ahead of earnings season.
    The pan-European STOXX 600  .STOXX  ended 0.1 percent higher
on its fourth straight day in the black -- its longest winning
streak since November.
    But Frankfurt, Paris and London all ended in negative
territory as enthusiasm over China's trade talks with the United
States waned without hard evidence about what was agreed.
    Worries about slowing economic growth in China also lingered
while Wall Street's gains from a rally on Thursday faltered as
Q4 results season kicks off in earnest next week.  urn:newsml:reuters.com:*:nL8N1ZB2T6
    "The lack of additional detail in relation to the update (on
U.S.-China trade talks) has encouraged some dealers to trim
their positions ahead of the weekend," said David Madden, market
analyst at CMC Markets UK.
    China-sensitive autos and parts suppliers  .SXAP  led the
falls, down 1 percent. Valeo  VLOF.PA  dropped 6.4 percent, the
biggest faller on the CAC 40, while Continental  CONG.DE  and
Volkswagen  VOWG_p.DE  were among the biggest DAX decliners.
    Still in the first full trading week of 2019, the STOXX 600
gained 1.7 percent as investors regained their appetite for risk
boosted by dovish comments from Federal Reserve chairman Jerome
    Equity funds drew inflows of $6.2 billion, the biggest in 11
weeks, BAML said.  urn:newsml:reuters.com:*:nL8N1ZB24Y 
    The FTSE 100  .FTSE  erased earlier gains as sterling
bounced amid growing expectations that the government may delay
its departure from the European Union beyond March 29.  FRX/ 
    Focus remained on Prime Minister Theresa May's efforts to
get her Brexit deal through parliament, with a crucial vote due
on Tuesday. A drastic about-turn in crude prices also weighed on
heavyweight oil stocks  SXEP .
    In the healthcare sector, downgrades by Jefferies hit UDG
Healthcare  UDG.L  and Orion Oyj  ORNBV.HE  which were the worst
individual performers with falls of 7.7 percent 7.4 percent
    French utilities took a hit after Societe Generale
downgraded ratings on Suez  SEVI.PA  and Veolia Environnement
 VIE.PA , citing doubts about the global growth outlook. 
    The stocks were down 2.8 percent and 2.6 percent
    The UK's housebuilders were stand-out gainers on the day
after BAML upgraded its view on the sector, saying "it seems at
least possible, or even probably, that some sort of Brexit
resolution is within sight and therefore the UK housebuilding
sector may see some relief".
    Taylor Wimpey  TW.L  and Persimmon  PSN.L  were leading
British blue chips, both rising more than 4 percent. 

 (Reporting by Julien Ponthus and Josephine Mason; Editing by
Andrew Heavens and Mark Potter)
 ((julien.ponthus@thomsonreuters.com; 02075426189; Reuters
Messaging: julien.ponthus.thomsonreuters.com@reuters.net))

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