By Carla Mozee, MarketWatch

Essilor, Luxottica reach merger deal

European stocks slumped Monday, with auto makers and bank shares losing ground as investors mull policy signals set to come from the U.K. and the U.S.

The Stoxx Europe 600 fell 0.7% to 363.42, with only the health care sector scoring gains. Financial, oil and gas and telecom stocks were losing the most. The benchmark on Friday rose 1% (http://www.marketwatch.com/story/fiat-rebound-sends-european-stocks-higher-into-the-weekend-2017-01-13) and ended the week with a modest gain of 0.1%.

In Frankfurt, auto makers were weighing on the DAX 30 , which dropped 0.7% to 11,546.45. Volkswagen AG (VOW.XE) (VOW.XE) fell 2.2%, Daimler AG (DAI.XE) gave up 1.8%, BMW AG (BMW.XE) shed 1.6%. Those moves came after U.S. President-elect Donald Trump, in an interview with Germany's Bild newspaper, reiterated his call for a 35% import tax on cars built in Mexico that will be exported to the U.S.

Trump on Sunday also took aim at car producers on Twitter:

(https://twitter.com/realDonaldTrump/status/820632299037409280)

Trump, who is slated to be sworn in as the 45th U.S. president on Friday, also told The Times of London newspaper that he'll aim to quickly strike a bi-lateral trade deal with the U.K. as the country exits the European Union.

U.K. Prime Minister Theresa May will outline her Brexit outlook in a speech scheduled for Tuesday. British media have reported that May (http://www.marketwatch.com/story/uk-pound-drops-ahead-of-theresa-mays-brexit-speech-2017-01-15) will push for the country to leave the trading bloc's single market in exchange for greater control of immigration policy.

"The big theme that is gripping markets globally right now is disquiet over what happens next with Brexit -- the pound has taken another beating, but critically we have a risk-off mindset in play," said Remo Fritschi, institutional sales manager at ADS Securities, in a note. The pound has dropped more than 1% against the dollar.

U.K. and European bank stocks were dragged lower, with U.K. banks facing the prospect of losing passporting rules that make for easier access into the EU market. Barclays PLC (BCS) (BCS) fell 2.2% and HSBC Holdings PLC (HSBA.LN) (HSBA.LN) shed 0.2%. The U.K's FTSE 100 was little changed at 7,337.73.

The Stoxx Europe 600 Bank Index fell 1.4%. Among decliners, Germany's Deutsche Bank AG (DBK.XE) fell 2% and Spain's Banco Santander SA (SAN)gave up 1.1%.

Movers: Essilor International SA (EI.FR) surged 14% after the French optical lens maker and Italian eyewear maker Luxottica Group SA (LUX.MI) said they are merging, creating an eyewear company with a market value of around EUR46.3 billion ($49.16 billion) (http://www.marketwatch.com/story/essilor-luxottica-to-combine-creating-eyewear-giant-worth-49-billion-2017-01-16).

Hugo Boss AG (BOSS.XE) shares fell 3% as the apparel and accessories retailer posted a slight fall in fourth-quarter sales and confirmed its outlook for lower full-year profit (http://www.marketwatch.com/story/hugo-boss-sales-slip-confirms-lower-fy-profit-2017-01-16).

Indexes: France's CAC 40 lost 0.8% to 4,885.26 and Italy's FTSE MIB lost 1.1% to 19,307.33.

The euro fetched $1.0583, down from $1.0645 late Friday in New York.

 

(END) Dow Jones Newswires

January 16, 2017 05:21 ET (10:21 GMT)

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