European banks gain while investors await UK election

Relief as Santander rescues Banco Popular, but FTSE falls ahead of Thursday’s polls

Banks and utilities supported European stocks on Wednesday, as there was a sense of relief among investors that Spain's struggling Banco Popular was being rescued by Santander.

European banks were among the standout performers, gaining 0.7 per cent.

Investors were also looking ahead to the UK election on Thursday, as well as the European Central Bank’s policy meeting.


The Iseq index was little changed. Building materials group CRH finished up 0.6 per cent at €31.90, but this was almost cancelled out by small nudges down for the other big stocks on the Dublin market. Ryanair closed down 0.5 per cent at €17.99, while Kerry finished at €81.06, down 0.3 per cent.


Bank of Ireland declined 3 per cent, despite gains for banks across Europe, while drinks group C&C fell 1 per cent to €3.30.

Hotels group Dalata advanced 1.6 per cent to €5.20. The company announced the sale and leaseback of the Clayton Hotel in Cardiff in Wales to M&G Real Estate, one of the world's largest property investors.


The FTSE 100 Index fell 0.6 per cent ahead of the UK general election. Polls are at odds on how close the election will be, with the Conservatives’ lead over Labour narrowing since the election was announced.

The energy sector took most points off the blue-chip index as oil prices fell sharply following data showing that US stocks of crude oil and gasoline surprisingly rose last week.

Shares in WPP were a top FTSE faller, down 2.6 per cent, after the world's largest advertising group released a poor trading update.

Financials stocks were the biggest boost to the index, helped higher by relief after the rescue of Spain's Banco Popular by Banco Santander. Royal Bank of Scotland and Lloyds both rose more than 1 per cent.

AstraZeneca fell 1 per cent, after selling the rights for its migraine drug Zomig to Grunenthal for up to $302 million. Shire also dropped 3 per cent.

UK house prices in May came in 3.3 per cent higher than a year ago, slightly ahead of the forecast by economists in a Reuters poll, giving a boost to housebuilders Persimmon and Taylor Wimpey.


The Stoxx 600 index fell 0.1 per cent, weighed down by a late drop in energy stocks. Germany’s Dax and France’s Cac 40 also both edged down about 0.1 per cent.

Although shares in Santander fell 0.9 per cent in choppy trade and Banco Popular's were suspended, Santander said it would buy Popular and carry out a capital increase of around €7 billion.

Spain's Bankia, Italy's UniCredit and France's Societe Generale were all up between 1 per cent and 4.9 per cent.

European utilities also gained, led by Germany's E.ON and RWE. Both rose more than 5 per cent after the country's highest court declared a nuclear fuel tax illegal, enabling them to claim back €6 billion in cash.

Shares in Swedish biometric firm Fingerprint Cards were the top Stoxx risers, jumping 11.6 per cent, after confirming an order for its sensors.

Covestro dropped 4.6 per cent after Bayer cut its stake in the plastics maker to 44.8 per cent from 53.3 per cent.


Wall Street stocks slipped in early afternoon trading on Wednesday, weighed down by a fall in oil prices, while caution reigned ahead of Thursday’s major political and economic events.

Exxon's 0.7 per cent fall and Chevron's 1.3 per cent fall were among the biggest drags on the S&P 500 and the Dow Jones.

Shares of Navistar International were down 4.2 per cent at $28.68 after the truck and engine maker posted a quarterly loss.

As well as the UK general election and the ECB’s meeting, the US market will be keeping an eye on former FBI director James Comey’s testimony before a Senate panel on Thursday.

– (Additional reporting: Reuters)