Italy concern pushes Europe lower
On Monday rising concerns about risks to Italian lenders’ financial stability from the upcoming referendum brought an end to a three-week rally in European shares.
UniCredit SpA and Banca Monte dei Paschi di Siena SpA declined more than 3.8 percent after the Financial Times reported that as many as eight Italian banks risk failing if Prime Minister Matteo Renzi loses the vote on constitutional reform this weekend. That sent the FTSE MIB Index down 1.5 percent, one of the worst performers in western-European markets.
The Stoxx Europe 600 Index slid 0.4 percent at 10:19 a.m. in London, trimming an earlier drop of as much as 1 percent. The volume of shares changing hands was 14 percent lower than the 30-day average. The equity benchmark is declining after rebounding 4.2 percent from a November 4 low amid speculation that Donald Trump’s U.S. election win will lead to increased fiscal spending.
After the U.K.’s vote to leave the European Union and Trump’s unexpected win, investors are on edge about the prospects of political and economic instability should Renzi lose the December 4 vote. A gauge of Italian lenders on Monday headed for its lowest level in more than three months, taking its 2016 slump to 51 percent. Royal Bank of Scotland Group Plc lost 2.8 percent on a report that it may struggle to sell all of its Williams & Glyn unit.
Also weighing on equities today is investor skepticism about OPEC’s ability to reach a deal to cut output at a meeting on the 30 November. Eni SpA and Tullow Oil Plc fell more than 1 percent as oil slid below $46 a barrel, pacing losses among energy producers.
Overnight, the MSCI Asia Pacific Index rose 0.8 percent, and Japan’s Topix index rose for the 12th day in a row with banks leading gains.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: firstname.lastname@example.org Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.