European Stocks Steady; Italian Banks Fall After Renzi Comments

Citigroup's Levkovich Calls Market Sentiment 'Crud'

European stocks were little changed while shares in Italy’s banks dropped along with the country’s bonds after comments by former Democratic Party leader Matteo Renzi increased expectations that an early election is possible.

The Stoxx Europe 600 Index closed at 391.25. Italy’s FTSE MIB dropped 2 percent, the most in almost two weeks, with UniCredit SpA falling 4.3 percent and Banco BPM SpA dropping 3.9 percent. Overall, trading across Europe was muted as U.K. and U.S. markets remained closed for public holidays.

  • Renzi told Il Messaggero that voting in the fall around the same time as Germany would reduce market uncertainty about Italy, while waiting until after the German vote would only increase the scrutiny of Italy. Separately, Italian newspapers reported that the largest political parties may converge on proportional system with a 5 percent cut-off threshold for smaller parties, similar to Germany’s election law.
  • Shares in British Airways owner IAG fell 2.8 percent in Spanish trading as the airline pushed to recover from a massive technology failure that disrupted hundreds of flights. IAG was the biggest decliner in Spain’s benchmark IBEX 35 index, which declined 0.2 percent.
  • Shares in other European airlines were also under pressure on Monday. U.S. Homeland Security Secretary John Kelly said he may ban laptop computers in the cabins of all international flights into and out of the U.S. amid continuing terrorist threats to bring down airplanes, but that a final decision hadn’t been made.
  • Shares in French electronics retailer Groupe Fnac SA dropped 2.5 percent after Le Journal du Dimanche reported CEO Alexandre Bompard poised to join Carrefour SA.
  • Overall, euro-area stocks may continue to outperform, with France set to benefit from government reforms while German and Dutch stocks in particular should be supported by the region’s improving economic backdrop and the positive corporate earnings trend, Fabrice Masson, head of equities at BFT Investment Managers, wrote in a note.
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