European Stocks Decline With Banks as FTSE 100 Extends Rally

European Stocks Push Lower as Banks Decline

Declines in lenders dragged European stocks lower, while the U.K.’s FTSE 100 Index closed at a record for an eighth straight day.

The Stoxx Europe 600 Index fell 0.5 percent at the close, after last week capping its best start to a year since 2013. The FTSE 100 rose 0.4 percent to cap its longest winning streak since May 2013. Its exporters got a boost as the pound slid on concern British Prime Minister Theresa May is planning to pull the country out of Europe’s single market. The FTSE 250 Index of mid-caps, driven higher for 10 consecutive sessions on signs of strength in the U.K. economy, also closed at a record.

  • “After a solid first week of trading it’s been a disappointing start to the week for European markets, with last week’s optimism giving way to a raft of profit taking, ahead of a week of important earnings announcements,” Michael Hewson, a market analyst at CMC Markets, wrote in a note.
  • Stoxx 600 banks tumbled the most since November, with those in Italy among the worst performers. The FTSE MIB Index posted the biggest decline among western-European markets after data showing Italy’s unemployment at the highest since June 2015 sparked concern about the economy.
  • While European lenders may be at a turning point after a decade of global underperformance amid a recovery in economic growth and improving commodity prices, they have a long way to go to catch up to their U.S. peers.
  • For UBS equity strategist Karen Olney, the continuation of the stock market rally will depend on more political clarity in Europe and U.S. as well as a return to profit growth. She wrote in a note that investors may want to pause after the strong gains seen in the second part of 2016.

— With assistance by Sofia Horta E Costa

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