European Stocks Fall From Seven-Year High, Led by Greek SharesInyoung Hwang
A drop in Greek stocks pushed European equities lower after a five-week rally.
The Stoxx Europe 600 Index lost 0.3 percent to 393.19 at the close of trading in London after falling as much as 0.9 percent. Greece’s ASE Index slid the most among 18 western-European markets as euro-area finance ministers said the nation must move faster to meet its rescue commitments in order to unlock more bailout funds.
“In the very short term it seems European markets are overbought and due for a pause,” said Raimund Saxinger, who helps oversee $22 billion as a fund manager at Frankfurt-Trust Investment GmbH. “Greece is just a short-term worry. Perhaps markets have became too complacent about Greece, but in the longer term it will not have an influence on stock markets.”
Dutch Finance Minister Jeroen Dijsselbloem, who heads the group of the region’s finance ministers, said talks with Greece have slid backward since last month’s agreement as the nation hasn’t offered the detailed measures that are needed. That helped send the ASE down 4.2 percent, the most in a month. Eurobank Ergasias SA and Piraeus Bank SA lost more than 11 percent.
The Stoxx 600 completed on Friday its longest weekly winning streak since June, closing at its highest level since July 2007, as the European Central Bank said it would start its asset-purchase program. It bought Belgian, French, German, Italian and Spanish bonds on Monday, according to traders in government debt.
ECB President Mario Draghi said last week the stimulus will spur the euro area’s fastest economic growth since 2007 and return inflation to the central bank’s goal within three years.
Germany’s DAX Index, one of the the best performers this year among developed markets, added 0.3 on Monday. The gauge reached more than 20 records in two months and options traders are showing little concern that it may drop, pushing the cost of hedging to a three-year low.
Lenders in Italy rose after Goldman Sachs Group Inc. wrote in a note that an Italian bank-reform bill will result in a wave of mergers. Banca Popolare dell’Emilia Romagna SC and Banca Popolare di Milano Scarl advanced more than 1.7 percent, pushing the nation’s FTSE MIB Index for the biggest gain among western-European markets.