Lenders push European equities down
The optimism that lifted European equities last week proved short-lived, with the shares now heading for their biggest slumps since early July.
In focus are lenders, as Deutsche Bank AG tumbled to a fresh record amid growing worries over its capital buffers. A gauge tracking them trades at 0.66 times book value, less than any other industry group in the region and near a record low relative to the Stoxx Europe 600 Index.
The benchmark gauge lost 1.4 percent at 1:51 p.m. in London, erasing more than half of the gains it posted last week. A measure of volatility awakened from its torpor, set for its biggest jump since January after closing at the lowest since 2014.
Deutsche Bank slumped 6.1 percent after a report that German Chancellor Angela Merkel has ruled out any state assistance before the national election next year. The lender has been in focus this month, after the U.S. sought $14 billion to settle claims related to the sale of mortgagebacked securities.
Energy producers and miners were also among the biggest drags for the region’s equities, with oil hovering around $45 a barrel before an OPEC meeting on Wednesday.
The optimism over central-bank stimulus that lifted shares last week is quickly fading amid growing worries about Europe’s recovery and the state of its lenders. Economic data for the euro area are back to missing forecasts, and investors pulled money from the region’s equity funds for a record 33 straight weeks, a Bank of America Corp. report showed on Friday. Banks have dragged down the Stoxx 600 by almost 7 percent this year, while equity gauges in the U.S. and Asia have climbed.
Oil rose to about $45 a barrel as Saudi Arabia’s offer to cut output opened the door to a future OPEC deal, even though the kingdom doesn’t expect an agreement this week when members of the group meet.