Energy Producers Lead Europe Stocks Down as Spanish Shares Fall

  • Equities pare earlier advances as euro strengthens, oil drops
  • All IBEX 35 companies fall, with CaixaBank tumbling 7.4%

European equities, which managed to stay up most of the day despite a plunge in the Spanish market, capitulated in the last hour of trading.

The Stoxx Europe 600 Index dropped 1.1 percent at the close of trading in London, erasing an advance of as much as 0.8 percent as energy companies declined with oil and the euro strengthened. Spain’s IBEX 35 Index tumbled 3.6 percent, the most since August, after the nation’s prime minister lost his majority in an inconclusive weekend election.

“People are reducing risk into year-end,” said Stewart Richardson, chief investment officer at RMG Wealth Management in London. “We had a lot of hype in the market post Fed and a positive reaction to that, so now the market is correcting. Political uncertainty in Spain is not very supportive.”

The Stoxx 600 slid after posting its best week in a month, thanks to a jump in exporters and financial companies following the first Federal Reserve interest-rate increase in almost a decade. On Monday, it trimmed its annual advance to 4.3 percent, closing 14 percent below the record reached in April.

In Spain, no clear governing majority emerged from Sunday’s election. While Prime Minister Mariano Rajoy’s People’s Party beat out the Socialists to take the most votes and earn the first shot at forging a government, he lost a third of his lawmakers. Today, banks contributed the most to the stock-market decline, with Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA down more than 4.7 percent, while CaixaBank SA fell the most in two years.

The elections have been weighing on Spanish shares this year, sending the IBEX 35 down 8.9 percent -- one of the worst performances in western Europe.

Among some of the companies rising today, Ericsson AB climbed 2.9 percent after the company said it settled a legal dispute over mobile-device patents with Apple Inc., reaching a licensing agreement that is set to result in more cooperation between the two technology-industry giants.

ITV Plc added 2.9 percent after a report that Comcast Corp. is weighing a bid, while Royal Vopak NV rose 4 percent after the oil-storage company agreed to sell its U.K. assets.

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