Banks, utilities steady European shares ahead of UK election
Reuters
Published Jun 07, 2017 06:01AM ET
Banks, utilities steady European shares ahead of UK election
By Kit Rees
LONDON (Reuters) - Banks and utilities buoyed European stocks on Wednesday, with relief that Spain's struggling Banco Popular (MC:POP) was being rescued by Santander (MC:SAN) lifting bank shares.
The pan-European STOXX 600 (STOXX) index reversed to trade 0.2 percent higher in its first session of gains this week, while Britain's FTSE 100 (FTSE) index rose 0.2 percent and Germany's DAX (GDAXI) fell 0.1 percent.
Although shares in Santander fell 2.4 percent in choppy trade and Banco Popular's were suspended, European banks (SX7P) were among the standout performers, gaining 0.7 percent.
Santander said that it would buy Popular and carry out a capital increase of around 7 billion euros ($7.9 billion).
"We're getting rid of a weak link from Europe in terms of Banco Popular being taken over by Santander," Mike van Dulken, head of research at Accendo Markets, said.
"As a stand-alone bank, (Popular) was close to failing ... and the failure of any bank, as we've seen in the past, can set of that chain of events where the whole banking sector gets freaked out, investors especially," van Dulken added.
Spain's Bankia (MC:BKIA), Italy's BPER Banca (MI:EMII) and France's Societe Generale (PA:SOGN) were all up between 2.2 percent and 3.8 percent.
European utilities (SX6P) also enjoyed gains, led by Germany's E.ON (DE:EONGn) and RWE (DE:RWEG), which both rose around 4 percent after the country's highest court declared a nuclear fuel tax illegal, enabling them to claim back 6 billion euros ($6.76 billion) in cash.
A rise among basic resources stocks (SXPP) and energy firms (SXEP) also helped support the wider market.
Shares in Swedish biometric firm Fingerprint Cards (ST:FINGb) were the top risers, jumping more than 7 percent after confirming an order for its sensors.
On the downside, Covestro (DE:1COV) dropped more than 4 percent after Bayer (DE:BAYGn) cut its stake further in the plastics maker to 44.8 percent from 53.3 percent.
Investors were also looking ahead to the UK's election on Thursday, as well as the European Central Bank's policy meeting.
"Whatever the outcome on Friday morning, markets actually have very little to go on to be able to judge whether such a new government would be more or less successful in negotiations with the EU," Don Smith, chief investment officer at Brown Shipley, said in a note.
Get The News You Want
"We are unlikely to see anything like the huge fluctuations in markets that occurred in the immediate wake of last summer’s referendum," Smith added, referring to the UK's vote in June last year to leave the EU.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.