Commerzbank drags shares off 5 year peak
Some solid corporate results helped indexes limit their losses
European shares pulled back from five-year highs this morning, led lower by struggling lender Commerzbank. Photo: Bloomberg
European shares pulled back from five-year highs this morning, led lower by struggling lender Commerzbank and some technical selling on overbought indexes.
Shares in Germany’s No.2 bank fell 4.5 per cent as sources said it may offer shares at a step discount in a rights issue this week, signalling limited appetite for the stock and weighing on the European banking sector.
It was the top faller on Germany’s Dax index, down 0.5 per cent at 8,240.73 points and the pan-European FTSEurofirst 300, down 0.2 per cent at 1,230.97 points at 08.00 GMT.
Both indexes were deep in “overbought” territory, their Relative Strength Indexes - a momentum indicator - showed, leading some short-term technical traders to book profits.
Standard Chartered, down 4.3 per cent in volume of 72 per cent of its 90-day average, was another major faller.
Traders cited a Bloomberg report that Carson Block, who runs short-seller research firm Muddy Waters, is betting against the UK financial firm’s debt because of deteriorating loan quality. The STOXX 600 Europe banking index fell 1.3 per cent.
Some solid corporate results helped European indexes limit their losses, with Italian motorway operator Atlantia up 1.6 percent after a quarterly update.
The STOXX Europe 600 index, down 0.2 per cent at 304.3 points, has risen 7.5 per cent since mid-April, fuelled by stimulus measures by central banks, leading some investors to wonder whether a pause may be due.
“The upside to our year-end Stoxx 600 target of 315 has fallen to 3 per cent, but we remain both strategically and tactically positive on euro area equities,” they write in a note.