Most European indices decline led by falls for banking stocks

European shares fell yesterday, weighed down by falls for banking stocks. An early rally deflated as a more cautious mood took hold later in the session, with investors shying away from taking risks.

Most major European indices ended in the red, while Wall Street equities were also lower in early trading and oil prices edged higher.

Dublin

The Iseq slipped into the red. Cement-maker

CRH,

the largest stock on the Dublin market, dropped 2.2 per cent to €31.50. The building materials company finished down for the second consecutive day, as recent gains unwound. The stock surged last week after the election of

Donald Trump

to the US presidency, as it is seen to be line to gain from his mooted boost to infrastructure spending.

Bank of Ireland and Permanent TSB both fell in line with financial stocks across Europe. After a stronger Tuesday, it was a weak session for airlines following the rise in oil prices, with Ryanair falling 2.5 per cent to €13.96.

Overall, the Iseq was down 1.3 per cent, which was a worse performance than the major European indices. Some stocks rose, however, with paper and packaging group Smurfit Kappa advancing 1.5 per cent to €20.68, and Hibernia Reit up 1.3 per cent at €1.19.

London

The FTSE 100 index fell after gaining in the previous two sessions, with companies such as jet engine maker

Rolls-Royce

and the country’s biggest housebuilder Barratt slipping after their updates. T

Rolls-Royce fell 2.1 per cent. The maker of engines for military jets, ships and nuclear-powered submarines said demand for its engines for extra-wide-body civil aircraft was strong, but business aviation had weakened further.

Barratt also saw some selling pressure and fell 2.8 per cent. It said it was having to cut the price of some of its most expensive London homes by up to 10 per cent, the latest sign the market is cooling after property tax increases and Britain’s vote in June for Brexit.

Europe

The Stoxx 600 fell 0.2 per cent. The index is down 7 per cent so far this year but has gained ground since Donald Trump’s surprise election victory last week. In Frankfurt, the Dax slipped almost 0.7 per cent, while in Paris, the Cac 40 ended the day down 0.8 per cent.

After hitting a fresh eight-month high, Europe's bank index turned lower as profit-taking kicked in. The index fell 1.2 per cent, making it the biggest sectoral loser in Europe, with Banca Popolare di Milano and other Italian lenders leading the sell-off.

Europe's chemical index fell 1.2 per cent, hit by a 4.2 per cent drop in Bayer, after the company placed €4 billion of bonds to help finance its Monsanto takeover.

Hugo Boss slumped 10.2 per cent after its new chief executive said a plan to revive the German fashion house, in part by targeting younger customers, will only bear fruit from 2018.

US

The S&P and the Dow fell as financial stocks ended a seven-day rally with a sharp drop, but gains in technology stocks helped as investors continued to work on preparing their portfolios for a Trump presidency.

While S&P financial stocks slipped they were still 9.3 per cent above their pre-election levels as investors are betting on higher interest rates and lighter regulation helping that sector. JPMorgan's 2.5 percent drop to $77.40 weighed the most on the sector. Traders are pricing in an 81 per cent chance that the Federal Reserve will raise US rates in December, according to Thomson Reuters data.

The S&P technology index, which fell as much as 3.6 per cent in the days after the election, ended up 0.92 per cent, helped most by Apple and Microsoft. US technology companies, most of which make their products overseas, could bear some of the brunt of any new trade restrictions. – (Additional reporting: Bloomberg/Reuters)