MILAN: European shares inched up on Monday, held back by heavy losses in Italy after a surge in support for anti-establishment parties in an inconclusive election, while a US threat of import taxes hit auto stocks.
After hitting a six-month low at the open, the pan-European STOXX 600 index was up 0.3 percent by 0932 GMT. Italy's FTSE MIB blue-chip index fell 1.5 percent, also a six-month low, dragged down by weakness among its banks.
Gains in energy and materials stocks however supported the broader European market. They were helped by a rise in crude prices ahead of a meeting between OPEC and US shale firms that raised expectations that producers would further discuss how to clear a global oil glut.
Italy faces a prolonged period of political instability after voters delivered a hung parliament.
"We expect lengthy negotiations after these elections, which may lead to increased volatility of Italian assets," said Matteo Ramenghi, CIO at UBS WM Italy.
Italy's parliament will meet for the first time on March 23 and President Sergio Mattarella is not expected to open formal talks on forming a government until early April.
Italian banks, seen as a proxy for political risk given their large government bond holdings, were down 3.5 percent to a near two-month low and were set for their worst day in more than one year.
Mid-sized lender Banco BPM tumbled nearly 7 percent, while Intesa Sanpaolo and UniCredit - the country's two biggest banks - fell around 3 percent.
Mediaset fell 4.7 percent after the party of former Prime Minister Silvio Berlusconi, whose family controls the private broadcaster, did worse than expected.
JCI Capital fund manager Alessandro Balsotti said even though the result was the least market-friendly, he did not expect systemic repercussions for European integration or the single currency, given that even the anti-establishment parties had toned down eurosceptic rhetoric during the campaign.
Also on Sunday, Germany's Social Democrats voted to enter a grand coalition with Chancellor Merkel's conservatives, signalling an end to political uncertainty in Europe's biggest economy.
Germay's DAX index added 0.4 percent, while France's CAC also rose slightly, as the German deal and confidence in Europe's economic recovery helped confine worries about the Italian political situation.
"The economic recovery in Europe and worldwide is much more resilient than in the past and the balance sheets of the companies are much stronger after many years of restructuring programmes," French asset manager Amundi said in a note.
US President Donald Trump on Saturday threatened European automakers with a tax on imports if the European Union retaliated against his plan to slap tariffs on aluminium and steel. In the auto sector, the top fallers were German automakers BMW and Daimler, down 1.4 and 0.6 percent respectively.
AXA fell 6.5 percent, leading losers among euro zone blue chips, after Europe's second-biggest insurer agreed to buy property and casualty insurance company XL Group for around $15 billion.
Irish stocks fell after weak business and consumer sentiment data. The benchmark Dublin index dropped 1.8 percent, bringing its decline so far this year to more than 7 percent.
Tech stock were stronger, buoyed by a 11.4 percent surge in Siltronic after the silicon wafer company delivered strong full-year results.
Comments
Comments are closed.