ECB rate cut fails to impress markets
Spanish and Italian banks fell as bond yields climbed after the ECB refrained from announcing new measures to support growth.
UniCredit SpA and Intesa Sanpaolo SpA, Italy’s largest banks, slumped 5.1 per cent to €2.81 and 4.4 per cent to €1.04 respectively. Italy’s 10-year government bonds extended their decline, pushing the yield on the securities above 6 per cent.
In Spain, BBVA plunged 4.8 per cent to €5.46 and Banco Santander, the country’s largest lender, fell 3.9 per cent to €5.10.
In Germany, Commerzbank AG led financial shares lower, while Merck KgaA dropped 2.3 per cent after its Erbitux cancer treatment failed to help patients with advanced stomach tumours.
Volkswagen AG climbed 5.1 per cent to €134.50 after it agreed to buy a 50.1 per cent stake in Porsche’s automotive business for €4.46 billion, ending a seven-year takeover saga that has divided two of Germany’s most powerful families.
The DAX Index declined 0.5 per cent to 6,535.56 at the close in Frankfurt. The gauge has still climbed 9.5 per cent from its 2012 low on June 5th
France’s CAC 40 retreated 1.2 per cent, while the Stoxx Europe 600 Index lost 0.2 per cent.
US STOCKS retreated, snapping a three-day advance for the Standard and Poor’s 500 Index, as investors geared up for a jobs report that is likely to show Europe’s crisis is weighing heavily on the US economy.
Earlier gains were driven by data showing fewer Americans than forecast filed jobless claims last week, while companies added more workers than estimated in June. Today’s jobs report may show the weakest quarter for employment in more than two years.
Financial shares had the biggest decline in the SP 500 as Spanish and Italian bonds plunged. JPMorgan Chase and Bank of America dropped at least 2.1 per cent. Equities pared losses as Apple, the world’s most valuable company, rallied two per cent.
Costco, Macy’s, Kohl’s and Target were among the chains that reported disappointing June sales at stores open at least a year. Costco shares were down 0.4 per cent at $94.01 and Target shares fell 0.5 per cent to $57.51. – (Additional reporting: Bloomberg)