European Stocks Fall From Five-Week High, Led by Italian Banks

Stoxx 600 Europe Index Declines
  • EDF slumps after CFO quits amid management disagreement
  • Old Mutual, FCC jump amid mergers-and-acquisition news

Traders questioning the longest run of weekly rallies since October sent European stocks lower, while a rise in oil prices helped equities pare losses in the final hour of trading.

The Stoxx Europe 600 Index slid 0.3 percent, trimming a decline of as much as 1 percent after China outlined an economic expansion of 6.5 percent to 7 percent for this year, which would be less than last year’s 6.9 percent rate, already the slowest growth in a quarter century.

“People are now taking profits after a decent run in the last weeks,” said Konstantin Giantiroglou, head of investment advisory and research at Neue Aargauer Bank in Brugg, Switzerland. “Economic data will become the dominant factor as everything looks so fragile, especially now ahead of ECB. The market expects the ECB to do something.”

European banks, the most hurt in this year’s rout, posted the biggest declines on Monday, while miners reversed losses to rally for a seventh day.

The region’s equities climbed for three straight weeks, rebounding 12 percent from their lowest levels since September 2013 hit last month amid concern over an economic slowdown and a rout in banks. The Stoxx 600 closed at its highest level since Jan. 29 on Friday, trading at a valuation of 14.8 times estimated earnings. While that’s up from the 13.2 reached in February, the multiple remains far below the 16.7 last April.

Italian lenders were once again leading declines, with Banca Monte dei Paschi di Siena SpA and Banco Popolare SC falling more than 4 percent. Concern over their bad loans sent them to their lowest prices since at least 2012 last month. The nation’s FTSE MIB Index dropped 1.2 percent for the biggest drop among western-European markets.

Investors are now waiting for Thursday’s European Central Bank meeting after President Mario Draghi said in January officials may reconsider monetary policy at the gathering. Since then, inflation has turned negative and economic data have started missing forecasts. Gross domestic product figures are due on Tuesday.

Some shares were active on deal news. Old Mutual Plc surged 6.9 percent after saying it’s considering all options as part of a strategic review, following a report that it’s drafting a plan to split itself up into standalone businesses. Fomento de Construcciones y Contratas SA jumped 15 percent after billionaire Carlos Slim bid for the Spanish builder.

Among other stocks moving on corporate news, Electricite de France SA sank 6.7 percent as its chief financial officer quit following a disagreement with the company’s chief executive officer. Just Eat Plc tumbled 9.6 percent after saying top managers at the company sold most of their stock.

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