Europe close: Stocks, euro down as traders sell Macron news

European stocks finished the day slightly lower as investors who bought the rumour now sold the fact on confirmation that centrist Emmanuel Macron had won France's presidential election over the weekend.

At the close, the Stoxx 600 was 0.13% lower at 394.04, the Cac-40 had fallen 0.91% to 5382.95 and the Dax was off by 0.18% at 12,694.55.

The euro was down by 0.66% to 1.0925 against the US dollar, with the latest CFTC data published on 5 May revealing another large reduction in 'short' positions against the single currency -- to their lowest since May 2014.

The yield differential between French and German 10-year sovereign bonds was unchanged at 43 basis points, having earlier fallen to 41.

Centrist-reformist Macron won 66.1% of the ballots, amid a voter turnout of 74.6%, which was largely as expected.

Some analysts, while positive, stressed that it was the June parliamentary elections that would decide if Macron had a clear mandate to move forward with his policy proposals.

"Today's result is a strong victory for President-elect Macron, coming at the upper end what the latest polls had predicted, which nonetheless consistently pointed towards a decent (20pp) gap in the run-up to the second round. It is an important step in ascertaining the policy direction for France, but is not sufficient to gain a complete picture, given the lack of clarity on the outcome of the forthcoming parliamentary elections (11-18 June)," said Francois Cabau and Philippe Gudin at Barclays Research.

The proportion of blank votes cast in the French elections hit a record 9%, twice as many as in 2002, when Jacques Chirac faced off against Jean Marie Le Pen.

BofA eyes premature exit by ECB

Economists at Bank of America-Merrill Lynch bumped up their growth forecasts for the euro area this year, from 1.5% to 1.7%.

Yet a slight slowdown is seen in 2018, back to 1.5%, with inflation even set to stray even further from the European Central Bank's target amid political challenges in France, Italy and Spain.

Consumer prices as measured by CPI were still seen rising by 1.6% and 1.3% in 2017 and 2018, respectively, assuming a price of oil at $53 a barrel. Lower oil price assumptions might see CPI print at 1.0% next year, they said.

Significantly, they pencilled in a one-off hike in the ECB's interest rate on deposits and the end of quantitative easing at the end of 2018, but cautioned clients that such a move would be "premature".

Manufacturing orders in Germany grew by 1.0% month-on-month in March (consensus: 0.7%), driven by a 4.8% surge in export orders, especially from other euro area economies and for capital and consumer goods.

Dutch chemicals manufacturer Akzo Nobel rejected a third takeover attempt from US rival PPG Industries, saying the mooted price tag of $27bn undervalued the company.

Also in the news, analysts at HSBC downgraded Germany's E.On to 'reduce' from 'hold', trimming their target price from €6.70 to €6.50. They also upgraded their view on Air-France KLM to 'buy'.

India's Royal Enfield was approached by investment bank Evercore to sound out its potential interest in buying Volkswagen's Ducati, according to The Times of India.

Atlantia would be ready to present a 'friendly' binding cash and share offer for Spain's Abertis by the end of this week, La Repubblica reported.