EUROPE MARKETS: European Stocks Step Higher, As Banks Stage A Revival
December 06 2016 - 06:02AM
Dow Jones News
By Carla Mozee, MarketWatch
Utility shares aid in Stoxx Europe 600 gain
European stocks edged higher Tuesday, as utility shares gained
and as banks recovered from the fallout from this weekend's
referendum in Italy.
The Stoxx Europe 600 index rose 0.2% to 341.86, but the advance
was held back by weakness in key sectors: oil and gas , basic
materials and industrial stocks.
On the upside, the utility sector logged the strongest gains,
with Germany's E.On SE climbing 5.9% and RWE AG (RWE.XE) up 4.7%. A
German court ruled on Tuesday that parts of the government's
nuclear phase-out law are unconstitutional, opening the door for
utilities companies to sue for damages.
(http://www.marketwatch.com/story/german-court-swats-parts-of-nuclear-phase-out-law-2016-12-06)
Another bright spot was Italy's FTSE MIB , which added 1.2% at
17,245.72, erasing Monday's slip of 0.2%
(http://www.marketwatch.com/story/italian-stocks-slump-after-voters-reject-renzi-in-referendum-2016-12-05)
. The Milan benchmark fell as low as 2.1% during that session after
Prime Minister Matteo Renzi said he would step down, given the
rejection of his constitutional reforms by Italian voters on
Sunday.
Read:How Italy's 'no' vote might be the ECB's silver lining
(http://www.marketwatch.com/story/how-italys-no-vote-might-be-the-ecbs-silver-lining-2016-12-05)
Renzi's resignation was accepted, but he has been asked to stay
on
(http://www.marketwatch.com/story/italian-prime-minister-matteo-renzi-to-stay-on-until-2017-budget-passes-2016-12-06)
to oversee the passage of Italy's 2017 budget.
Lenders revive: Bank stocks, which bore the brunt of the
intraday selloff on Monday, brightened on Tuesday. The Stoxx Europe
600 Banks Index put on 1.7%, while the FTSE Italia All-Share Banks
Sector Index was up 2.5%.
Banca Popolare di Milano (PMI.MI) picked up 1.9%, Banco Popolare
Societa Cooperativa (BP.MI) picked up 2% and Unione di Banche
Italiane (UBI.MI) moved up 2.6%.
But shares of Banca Monte dei Paschi di Siena SpA (BMPS.MI) ,
which are not on the Stoxx 600, were down 3%. The world's oldest
lender is working to sustain its 5 billion-euro recapitalization
plan, with the prospect of state aid being raised. The lender is
expected to meet with European Central Bank officials on Tuesday,
media reports said.
See:Monte dei Paschi advisers scramble for rescue plan
(http://www.marketwatch.com/story/monte-dei-paschi-advisers-scramble-for-rescue-plan-2016-12-05)
Italian banks have been a trouble spot in the European market
this year as the industry grapples with more than EUR200 billion in
bad debt. UBS said it has a neutral stance on eurozone financial
shares.
"Until we get clarity on the recapitalization efforts in Italy
and better earnings prospects for the sector, currently penalized
by the low interest rates, we recommend a selective approach,
focusing on banks that can generate higher profitability with a
particularly compelling investment risk/reward," wrote UBS in a
note published Tuesday.
Read:The other loser in Italy's vote -- its big banks
(http://www.marketwatch.com/story/the-other-loser-in-italys-vote-its-big-banks-2016-12-05)
Movers: IG Group Holdings PLC (IGG.LN) shares plunged 31% after
the U.K.'s Financial Conduct Authority said it plans to crack down
on the sale of certain financial derivative products. The FCA said
it's concerned consumers are opening and trading products "that
they do not adequately understand."
Indexes: In Frankfurt, the DAX 30 index notched a 0.1% gain at
10,695.84, and Spain's IBEX 35 pushed up 1.3% to 8,776.
France's CAC 40 index moved up 0.2% to 4,583.45. France's Prime
Minister Manuel Valls said Monday he'll run for president as the
Socialist Party candidate, after party colleague and French
President Francois Hollande said he wouldn't try for a second term.
Interior Minister Bernard Cazeneuve will take up the post
(http://www.wsj.com/articles/hollande-appoints-interior-minister-as-frances-new-prime-minister-1481018801)
of France's prime minister until the country's presidential
elections next spring
The U.K.'s FTSE 100 was little changed at 6,744.97.
The euro was trading at $1.0768, not far from where it traded
late Monday in New York. During the Monday session, the shared
currency hit a 21-month low
(http://www.marketwatch.com/story/euro-tumbles-to-21-month-low-against-dollar-after-italys-no-vote-2016-12-05)
after the outcome of the Italian referendum, before bouncing back
to log its best day against the dollar since early June.
(END) Dow Jones Newswires
December 06, 2016 05:47 ET (10:47 GMT)
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