Shares fall across Europe on back of Italian bank woes

Pressure on Italian banks stemming from a cash call at lender Monte dei Paschi weighed on European markets on Monday sending shares across the continent falling.

DUBLIN

Traders in Dublin said that virtually all leading stocks fell and volumes were light on Monday. “There was not a lot of positivity out there,” one dealer noted.

Index heavyweight building materials giant CRH was down 2.51 per cent at €31.12.

Bookmaker Paddy Power Betfair dropped 1.88 per cent to close at €99. Multinational packaging group Smurfit Kappa was 1.42 per cent off at €20.85.

Smurfit Kappa in battle to join London’s FTSE 100

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European shares slip due to worries over Italian banks

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Scrappy day of trading on Iseq Index as US market enjoys half day

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Oil prices static on uncertainty over planned production cut

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Cuisine de France owner Aryzta climbed 3.19 per cent despite the Irish-Swiss baker reporting that first-quarter revenues were down 3.3 per cent on contract renewal losses and a subdued European performance. Shares in cider maker C&C lost 2.38 per cent to close at €3.436.

Amongst smaller stocks, Bank of Ireland slid 2.38 per cent to 20.5 cent as investors stayed away from financial stocks. Permanent TSB Group tumbled 4.35 per cent to €2.51.

LONDON

Irish-based DIY and builders' merchant Grafton slid 2.79 per cent to close at 540.5 pence sterling in London, where the company's shares are listed.

Another UK-listed Irish business, explorer Tullow Oil, which has interests in Africa, South America and Europe, fell 1.2 per cent to 269.3 pence on general weakness in its sector. The wider UK oil and gas index was down 1.2 per cent. BP dipped 0.59 per cent to 452.25p and Royal Dutch Shell shed 1.85 per cent to close at 2,072p.

Lloyds Banking Group, Barclays and Royal Bank of Scotland fell by 1.5 to 2.6 per cent, as Italian banks sank to an eight-week low.

Among mid-caps, shares in Man Group fell 4.6 per cent after Exane downgraded its rating on the world's biggest listed hedge fund to "neutral"; rival Aberdeen Asset Management also fell almost 4 per cent after profits fell and outflows continued.

Consumer businesses slipped, with traders citing early indications that sales during last week’s Black Friday promotion disappointed and spending could weaken into next year.

Retailers Next and Marks & Spencer fell 2.6 and 1.6 per cent respectively, while broadband and pay TV providers BT and Sky fell 2.4 and 2.3 per cent.

EUROPE

The Stoxx Europe 600 index was down 0.8 per cent at 339.83 by the close. The regional bank index closed down 1.8 per cent, the biggest sectoral faller. Italian banks fell 3.9 per cent, hitting an eight-week low, on continued doubts over Banca Monte dei Paschi di Siena's ability to execute a €5 billion capital cash call.

Investors fear that a failure of the capital-raising could heighten worries over the whole Italian banking system, adding to pessimism over political stability ahead of Sunday’s referendum on constitutional reform.

Monte dei Paschi was suspended for excessive volatility after a drop of more than 12 per cent and ended down 13.8 per cent, while the country's strongest bank Intesa Sanpaolo lost 3.2 per cent.

The oil and gas index also dropped as major oil producers convened in Vienna for an Opec meeting later in the week. Shares in oil majors Total, Royal Dutch Shell and Eni fell in early trade, reacting to steep losses in oil prices late on Friday and on Monday morning.

However, the sector ended off on lows, down 0.6 per cent, after Brent crude turned sharply higher when Iraq’s oil minister said the country was looking to co-operate on a deal to cut output.

NEW YORK

US stocks were lower in early afternoon trading on Monday, weighed down by financial and consumer discretionary stocks, as some investors cashed in following a record-setting week.

Oil prices gained more than 2 per cent in volatile trading, recouping early losses, as the market reacted to the shaky prospect of major Opec producers being able to agree output cuts at a meeting on Wednesday.

Wells Fargo and Bank of America were down about 1.5 per cent and were among the biggest drags on the S&P index.

The consumer discretionary index also fell 0.57 per cent. Amazon was down 1.6 per cent at $767.74 after Citigroup reduced its price target on the stock. The stock was the biggest drag on the Nasdaq and the S&P.

Time jumped 16 per cent to $16.01 after the New York Post reported that the publisher had rejected a takeover bid from billionaire investor Edgar Bronfman jnr.

Additional reporting: Bloomberg, Reuters