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The Lingering Problem of Monte Paschi and Italian Banks

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It's a bad day for European banks, Blackstone ends its 'endless' fund, and oil's rising again. Here are some of the things people in markets are talking about today.

Euro banks hit

Struggles continue in the Italian banking sector, where at least 52 billion euros ($54 billion) is needed to clean up balance sheets, according to data compiled by Bloomberg. This is far above the scale of the rescue package proposed this week by the government, and comes amid concerns that Banca Monte dei Paschi di Siena SpA will fail in its efforts to attract 5 billion euros of private-sector funds. Shares in the embattled lender lost 18.2 percent in trading this morning. Spanish lenders' shares were also hit — falling as much as 10 percent — after Europe's top court ruled against the institutions on a mortgage interest-payments case that means customers may be entitled to billions of euros in compensation.

Blackstone closes Senfina

Blackstone Group LP is closing its Senfina hedge fund after it lost 24 percent this year. Two-year-old Senfina — which means 'endless' in Esperanto — was one of the top performing funds in 2015, according to data compiled by Bloomberg. But a bad performance early in 2016, coupled with some wrong-way bets around the U.S. election, meant Blackstone did "what was in the best interest of our investors" and closed the fund, according to a spokesperson. 

Oil rises 

A barrel of West Texas Intermediate for February delivery was trading at $53.56 at 5:13 a.m. ET, as data showed U.S. stockpiles declined last week. On the supply-side, Libya is set to load its first crude cargo in two years from its largest export terminal, with the war-torn country expected to double output in 2017. In North America, Canadian Prime Minister Justin Trudeau joined U.S. President Barack Obama in freezing new offshore leases in Arctic waters. 

Markets slip

Overnight, the MSCI Asia Pacific Index was little changed, while Japan's Topix index dropped 0.5 percent as the yen strengthened against the dollar. In Europe, the Stoxx 600 Index was 0.2 percent lower at 5:20 a.m. ET, with losses in bank shares pulling equities lower. In the U.S., where investors are still waiting to see Dow 20K, S&P futures were unchanged

Brexit plans

The Confederation of British Industry outlined what different sectors want from Brexit, with many responses along the lines of "as little Brexit as possible, please." For the U.K. prime minister, who said the country may seek to make a transitional deal to ease departure from the EU, a court ruling in Luxembourg on a proposed trade deal between the union and Singapore highlights the difficulties the U.K. could face in the future. The implication from the ruling is that the country will have to negotiate with 27 other national parliaments, and in some cases their regional lawmakers, in order to put a trade deal in place. There was some good news this morning, as borrowing data showed Britain’s budget deficit narrowed marginally in November.

What we've been reading 

This is what's caught our eye over the last 24 hours.

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