European Stocks Slide as Brexit Fallout Concern Spurs Bank Routby and
Banks, travel companies among biggest decliners on Stoxx 600
EasyJet tumbles after warning of fall-off in travel demand
European stocks slid for a second day, extending losses as investors continued to speculate on the fallout from Britain’s shock vote to leave the European Union.
U.K. banks led a gauge of European lenders to its lowest level since 2011, with Royal Bank of Scotland Group Plc tumbling 15 percent, while Barclays Plc slid 17 percent. Close Brothers Group Plc and Schroders Plc paced financial-services stocks to the worst performance of the 19 industry groups on Stoxx Europe 600 Index. EasyJet Plc dragged travel-and-leisure companies lower, sliding 22 percent after warning that a drop-off in travel demand arising from a Brexit will pare earnings over the rest of summer period.
The Stoxx 600 slipped 4.1 percent to 308.75 at the close of trading. Shares tumbled the most since 2008 on Friday as the Brexit win set the stage for months of uncertainty while the U.K. negotiates its exit from the bloc. The FTSE 100 lost 2.6 percent even as Chancellor of the Exchequer George Osborne sought to reassure financial markets by saying that a contingency plan is in place to shore up the U.K. economy. The volume of European shares changing hands today was two-and-a-half times the 30-day average, while for British equities, it was threefold.
“It’s going to continue to be a fairly choppy ride,” said Michael Hewson, a market analyst at CMC Markets in London. “Banking stocks will continue to struggle. There is still a wider concern about the stability of the European banking sector. The ECB will reiterate it remains prepared to act given any circumstances, as will central banks around the world.”
Investors are looking to central banks for indications of possible measures to contain market volatility and support the euro-region’s already lackluster economic growth. The European Central Bank is hosting a three-day meeting in Sintra, Portugal that will include a speech from its president, Mario Draghi. Bank of England Governor Mark Carney and Federal Reserve Chair Janet Yellen both canceled planned appearances. German Chancellor Angela Merkel hosts EU President Donald Tusk in Berlin today to talk about the U.K.’s exit plan.
Spain’s IBEX 35 Index fell 1.8 percent. It earlier gained as much as 3.4 percent after acting Prime Minister Mariano Rajoy defied opinion polls to consolidate his position in yesterday’s general election. His People’s Party nonetheless fell short of a majority, requiring Rajoy to seek talks with competing parties in order to form a government.
It’s been a wild ride for European equities in the past few weeks, with the Stoxx 600 falling to its lowest level since February before rebounding 7.8 percent in the five days through last Thursday as volatility surged in the run-up to the vote. The index is now heading for an 11 percent decline in June, it’s worst monthly performance since October 2008.
Among stocks moving on corporate news, Volvo AB fell 15 percent after saying it increased its provision for a possible European Commission fine for a suspected trucks cartel. K+S AG dropped 12 percent after a slide in the price of potash, worse-than-expected factory stoppages and weak North American demand for de-icing salt all but wiped out profit in the second quarter.
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German property companies bucked the trend, with Vonovia SE climbing 2.4 percent as Morgan Stanley raised its rating on the shares. Deutsche Wohnen AG added 1.3 percent.