European shares drop as banks and Boeing suppliers hit

European shares fell on Monday as investors in suppliers to Boeing baulked at news late on Friday that the US plane maker announced a production cut and the wider market took a breather following a recent strong performance by equities.

The pan-European Stoxx 600 index dropped 0.2 per cent.

DUBLIN

The Iseq index of Irish shares slid by 1.4 per cent to 6,295.96, having hovered around six-months highs on Friday.

Banking stocks, which had put in a good performance last week amid hopes that the UK was edging towards a soft Brexit, succumbed to some profit taking as sector followers positioned themselves before a European Central Bank meeting later this week.

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AIB fell by 2.7 per cent to €4.07, while Bank of Ireland declined by 1.9 per cent to €5.62.

Bookmaker Paddy Power Betfair lost 1.9 per cent to €71.41 after hot-favourite Tiger Roll secured a second victory in Britain's Grand National. Smaller peers William Hill and GVC were also in the red in London.

Independent News & Media, which swung between gains and losses of more than 3 per cent during the session, ended trading up 1 per cent at 10 cent, as investors continued to hope that the company's talks with an unknown suitor, announced last week, would result in a takeover deal.

Bucking the trend, Datalex, which had been under pressure of late, edged 4.2 per cent higher to 84c.

LONDON

The UK’s main stock index bounced back on Monday, rescued from the red by a turnaround in oil majors, although financials fell and industrials were bruised after Boeing said last week it was slashing its 737 aircraft output.

The exporter-heavy FTSE 100 was up 0.1 per cent at its highest closing level since early October.

Sector heavyweights Shell and BP jumped more than 1 per cent to their highest this year, as oil prices were driven by expectations of tighter global supply because of fighting in Libya, Opec-led cuts and US sanctions against Iran and Venezuela.

The gains helped cushion steep falls in blue-chip financial stocks, which were the biggest drags on the FTSE 100.

Biggest midcap faller was specialist tourism and insurance firm Saga, which slumped 10 per cent to an all-time low after UBS cut its rating, followed by luxury carmaker Aston Martin with an 8 per cent drop after Deutsche Bank cut its rating.

EUROPE

France's Safran slid 2 per cent as Boeing revealed a plan to cut 737 aircraft production by nearly a fifth. Safran's joint venture with General Electric provides Boeing with engines for the 737. Melrose Industries, another supplier to Boeing, slid 2 per cent. Still, Boeing's French rival Airbus rose 1.7 per cent.

Bank stocks dropped, with German lender Commerzbank among the top losers on the sector index with a 2.4 per cent fall. Deutsche Bank, with whom Commerzbank is exploring a merger, dropped 1.9 per cent.

European bank supervisors demanded a detailed roadmap outlining the pace and scale of staff cuts in the two banks as they explore a merger, according to a report by German daily Handelsblatt.

Real estate stocks fell 1.3 per cent with Deutsche Wohnen dropping 3.1 per cent following protests over the weekend demanding expropriation of apartments in Berlin that have been sold off to big private landlords.

Software firm SAP dropped as much as 2.2 per cent after it said the head of its cloud business group had quit, but regained some ground to close 0.6 per cent lower.

NEW YORK

US stocks were lower in mid-afternoon trading, following the S&P 500’s seven-day winning streak, as Boeing’s shares took a hit and investors braced for what could be the first decline in corporate earnings since 2016.

Southwest Airlines fell after the carrier said it was pulling out all 737 MAX jets from its flight schedules through June 7th, extending its earlier timeline by a week.

General Electric tumbled after JPMorgan downgraded the conglomerate's shares to underweight, the equivalent of a sell.

The Dow Jones Industrial Average was down 0.5 per cent, while the S&P lost 0.2 per cent and the Nasdaq dipped 0.1 per cent.

Symantec jumped after a report that Goldman Sachs raised its rating on the cyber security firm's stock to a buy. – Additional reporting, Reuters.