European shares fell on Monday as concerns over China weighed on mining stocks and Opec anticipation dented the oil sector, while financials were led lower by Julius Baer, which tumbled after its chief executive unexpectedly quit to join a rival company.
The pan-European STOXX 600 index fell back 0.5 percent, surrendering after signs of a reversal earlier, as weakness across cyclical sectors left defensive real estate and utilities stocks the only gainers. Jitters over China's demand for metals drove mining stocks down 1.2 percent, the worst-performing sector. Falling crude prices ahead of Thursday's Opec meeting also weighed on oil and gas stocks, with Tullow Oil and Subsea 7 among the biggest fallers.
Tech stocks, the best-performing this year, also tumbled 0.7 percent after a downbeat note from Morgan Stanley on the sector. Deutsche Bank equity strategists said fading growth momentum in the euro area in 2018 will favour defensive and bond proxy sectors, which they forecast will outperform cyclicals. Deal-making was also a central focus on Monday.
Insurance stocks gave back earlier gains after Allianz struck a deal to buy out France's Euler Hermes. Shares in Germany's biggest insurer were buoyed by the deal, but slipped back to close down 0.7 percent after it agreed to buy the shares it did not yet own in the French credit insurance firm for around 1.85 billion euros.
Analysts said the deal made strategic sense for Allianz, whose shares have risen more than 30 percent over the last 12 months, but that it looked expensive. "Allianz seems to have waited a long time to pay a high price for this obvious piece of minority clean-up," KBW analyst William Hawkins wrote, adding the deal presented negligible risk as Euler Hermes had effectively been run as a subsidiary.
Euler Hermes shot up 20 percent. Commerzbank was initially boosted, but ended the day unmoved after Swiss paper Neue Zuercher Zeitung am Sonntag reported UBS had formed a team to look into strategic options such as buying parts of the German lender. Shares in UBS, which declined to comment, edged down 0.8 percent. Julius Baer was the weakest among financial stocks, down 6.2 percent after CEO Boris Collardi resigned suddenly, with immediate effect, to take a post at rival Pictet.
Analysts said there were concerns the move could also result in the loss of client assets. Elsewhere, chipmakers such as ams and Infineon fell with traders citing a drop in Samsung Electronics after Morgan Stanley downgraded the stock, saying the global chip memory boom could peak soon. Shares in ams were down 4.6 percent. They are the top-performing among tech stocks in Europe this year, up 279 percent year-to-date.
Danish pharmaceutical company Lundbeck dropped 7.2 percent after Nordea analysts lowered their target price for the stock. Among country benchmarks, Germany's DAX fell 0.5 percent with investors keeping a close eye on efforts to form a working government. Leaders of Chancellor Angela Merkel's conservative party agreed on Sunday to pursue a "grand coalition" with the Social Democrats (SPD) to break the political deadlock.
Among top movers on the STOXX were also shares in Belgian supermarket firm Colruyt, down 4.9 percent after Deutsche Bank cut its price target on the stock, while French tech company Ingenico, up 3.7 percent, was supported by a Morgan Stanley upgrade to equal-weight.
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