LONDON, June 8 — European stocks declined, snapping their biggest back-to-back gains in two weeks as banks led losses and global-growth concern resurfaced.
Spanish and Italian lenders slid, with UniCredit SpA and Banco Popular Espanol SA down more than 2.9 per cent. Erste Group Bank AG retreated 2.6 per cent after one of its holders sold a stake in it. French payments processor Ingenico Group SA slid 6.8 per cent after peer VeriFone Systems Inc. cut its annual earnings and revenue forecasts.
The Stoxx Europe 600 Index lost 0.6 per cent at 9:56am in London. The World Bank late yesterday cut its outlook for global growth and said downside risks have become more pronounced since the start of the year.
“Markets are generally struggling to find a direction at a time when economic data is not bad, but it’s not great either,” said Michael Hewson, a market analyst at CMC Markets in London. “Ultimately, the global outlook remains pretty weak. The World Bank did not just cut the forecast, it suggested that the risks were tilted to the downside. Now we are getting a little bit of profit taking.”
After falling as much as 5.4 per cent from an April 20 high, European shares regained momentum at the end of May, posting their biggest monthly advance since November. Still, stocks have struggled to top that peak as global-growth worries war with optimism over continued central-bank support. The Stoxx 600 is falling today after posting gains amid rising oil and Federal Reserve Janet Yellen’s reassurance that the US economy is making progress.
The European Central Bank began buying corporate bonds today, people familiar with the matter said. Purchases included French utility Engie SA, Spain’s Telefonica SA and Italian insurer Assicurazioni Generali SpA, they said.
Utilities bucked the trend to post one of the best performances among Stoxx 600 groups, with Engie up 1.1 per cent. Germany’s RWE AG and EON SE rose at least 1.6 per cent.
Investors are focused on central-bank and political events this month: the Fed announces its rate decision on June 15, a referendum on June 23 will determine Britain’s membership in the European Union and Spain’s general election is due three days after that.
“When you’ve got a fragile global economy, the last thing you want is events like the UK referendum and the Spanish election with an uncertain outcome,” said Hewson. “They are adding to the tail risks.”
Traders have pushed back bets for a US rate hike after last week’s disappointing jobs report. They are pricing in no chance of a boost in June, and December is now the first month with more than even odds of higher borrowing costs. — Bloomberg
