Europe close: French country risk higher amid political concerns
European stocks were mixed on Monday, as investors sifted through corporate earnings amid upwards pressure on most euro area government bond yields after French far-right candidate Marine Le Pen laid out her plans for a referendum on EU membership.
The benchmark Stoxx Europe 600 skidded 0.68% to close the day out at 361.60, Germany’s DAX was 1.22% lower to 11,509.84 and France’s CAC 40 was off 0.98% to 4,778.08.
Meanwhile, West Texas Intermediate was down 0.96% at $53.32 a barrel and Brent crude by -1.23% firmer to $56.12.
On Sunday, Le Pen outlined her plans for a referendum on the country's continued membership of the EU, an exit from the euro, 'smart' protectionist measures and a cap on immigration.
In parallel, analysts warned it would be a critical week for the country's centre-right Republicans party, following allegations against its leader that he embezzled roughly €900,000 in public funds.
Combined, the news out of France saw French 10-year bond yields rise by six basis points to 1.14% even as haven flows drove equivalent maturity german Bund yields down by four basis points to 0.37%.
The difference, which many analysts use as a proxy for 'country risk' thus blew out to its widest since at least March 2013.
Elsewhere, German finance minister Wolfgang Schäeuble criticised the European Central Bank for its weak euro policy over the weekend.
On a releated note, in remarks to the European Parliament European Central Bank President Mario Draghi said the monetary authority will not tighten policy to counter rising inflation as the increase is temporary and due to improving oil prices.
Italian lender Unicredit fell 6.86% amid a rights issue.
Randgold Resources shone 4.15% after it reported a 76% jump in fourth-quarter profit and hiked its annual dividend.
National Grid nudged 0.59% higher after saying it will spend £35m to buy back up to 3.5m shares to reduce its share capital as part of its management of the dilution resulting from the take-up of its scrip dividend offer for the interim dividend paid in January.
Budget carrier Ryanair flew 3.76% lower as it reported a drop in third-quarter profit and sounded a cautious note on the outlook for 2017, although the company maintained its full-year profit guidance forecast.
On the data front, investors were digesting figures showing German factory orders increased the most in two and a half years in December thanks to a rise in investment-goods demand.
Adjusted for seasonal swings and inflation, orders were up 5.2% from the previous month, when they declined a revised 3.6%. Economists had been expecting a much more modest 0.7% gain. On the year, orders were up 8.1%.