Europe close: Banks pace retreat on news of Deutsche Bank capital plans
European equity markets edged lower on Monday, with Deutsche Bank dragging the DAX down following news of its capital raising plans and as investors considered the prospect of a US rate hike.
By the closing bell, the benchmark Stoxx Europe 600 index was down 0.52% to 373.27, Germany’s DAX fell 0.57% to 11,958.40 and France’s CAC 40 erased 0.46% to 4,972.19.
Meanwhile, Brent crude edged lower by 0.107% to $55.83 per barrel and West Texas Intermediate was 0.45% weaker at $53.09. Some observers of the market referenced reports that Russia's oil output was steady in February as stoking worries about the degree of compliance with a deal to cut production.
Rebecca O'Keeffe, head of investment at Interactive Investor, said: "Fed chair Janet Yellen confirmed that this week's US employment numbers are really the only factor that could possibly stand in the way of a March rate rise, so markets are in a wait and see mode and are likely to remain largely range bound until confirmation is delivered on Friday."
Geopolitical worries following North Korea's test firing of missiles at the weekend and ahead of next week's Dutch elections were also cited by traders as reasons behind Monday's dour sentiment.
German lender Deutsche Bank was down 6.19% after it said it will raise €8bn through a rights issue and list its asset management arm as part of a strategic overhaul.
That news saw the Stoxx 600 gauge of lenders' shares retreat 1.22% to 174.49.
The bank will raise funds from up to 687.5m new shares at €19.14, a 39% discount to Friday’s close price, to boost its capital core ratio.
Elsewhere, the euro fell after former French prime minister Alain Juppé confirmed he will not run for the presidency, despite suggestions that he would replace embattled Les Républicains candidate François Fillon who is embroiled in a payroll scandal.
The euro was off 0.27% against the US dollar to 1.0587 on the back of his announcement.
In other corporate news, Peugeot SA was 2.73% higher after the carmaker said it would buy Opel and Vauxhall brands from US rival General Motors for about €2.2bn, leapfrogging Renault to become the second-largest manufacturer in Europe by sales.
Standard Life surged 5.68% and Aberdeen Asset Management rose 4.75% after agreeing terms for an £11bn merger, having revealed talks over the weekend.
Acacia Mining slid 10.00% after Tanzania's president decreed a ban on exports of mineral ores. Overall, miners were the worst performers, likely weighed down by news over the weekend that China is now targeting growth of 6.5% this year, down a touch from last years’ growth rate of 6.7% and from the government’s target growth range of 6.5% to 7% in 2016.
On the data front, IHS Markit’s Eurozone retail purchasing managers' index fell to 49.9 in February, from 50.1 in January, showing little change in retail.
Meanwhile, IHS Markit’s purchasing managers' index for Germany rose to 54.1 in February from a five-month low of 52.0 in the earlier month. A reading above 50 indicates expansion.