European Stocks Decline With Banks as FTSE 100 Extends RallyBy
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