Spanish Bank Declines Keep European Stocks Away From 2016 Gain

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European Stocks Decline on Spanish Bank Weakness

Lenders in Spain fell after losing a court ruling, hampering a rally in European stocks that had pushed them closer to erasing its losses for the year.

Banco Popular Espanol SA tumbled 5.8 percent and Banco de Sabadell SA dropped 1.3 percent. A ruling by the European Union’s top court in favor of borrowers means Spanish lenders may have to give back billions of euros to mortgage customers. Switzerland’s Credit Suisse Group AG retreated 2.4 percent as financial firms slipped. The Stoxx Europe 600 Index lost 0.2 percent, paring a decline of 0.4 percent, with the volume of shares changing hands about a third lower than the 30-day average.

  • Italian lenders also fell, with Banca Monte dei Paschi di Siena SpA down 12 percent after earlier tumbling 19 percent. The stock slumped 22 percent in the past thee days on concern it will fail in its efforts to raise 5 billion euros ($5.2 billion) of funds.
  • “Whilst an undertone of traditional year-end bullishness remains, the outstanding issue of Monte dei Paschi’s rescue, be it via bailout or recapitalization, remains a hindrance on extension of the current Santa rally,” Accendo Markets analysts Mike van Dulken and Henry Croft wrote in a note.
  • Actelion Ltd. rallied 6.4 percent after two days of losses. The company entered into exclusive talks with Johnson & Johnson about a possible deal, according to statements after the market close.
  • The Stoxx 600 has rallied 5.4 percent in December and is 1.4 percent away from erasing its 2016 decline.
  • Strategists expect the gauge to end 2017 at 366, 1.5 percent higher than Wednesday’s close, according to the average of nine estimates compiled by Bloomberg.
  • While analysts see profit at the benchmark’s firms declining 2.2 percent this year, they expect growth of more than 12 percent in 2017.