Lenders push Euro­pean eq­ui­ties down

Malta Independent - - FINANCIAL -

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.

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