Europe midday: Russia fears, German sentiment data sends stocks lower

European shares stayed lower on Monday as investors fretted about political instability in Russia after an aborted “mutiny” by a former key ally of president Vladimir Putin, and German business sentiment fell further in June.

The pan-European Stoxx 600 index was down 0.42% in early deals with all major bourses lower.

Oil prices made strong gains after the rebellion by Russian mercenaries led by Yevgeny Prigozhin sparked fears of a potential hit to oil supply from Russia.

‘’The weekend rebellion which rocked Russia has sent the price of oil higher, as traders assess the regime’s instability following the insurgency. Brent crude jumped by more than 1% before retreating a little, amid expectations of tighter supply,” said Susannah Streeter, head of money and markets, at Hargreaves Lansdown.

“Despite the sanctions by Western powers, Russia is still one of the world’s largest oil producers, with China and India key customers. Putin has been judged to be significantly weakened following the Wagner group’s actions and uncertainty has thrown light on potential production issues ahead if more unrest follows.”

In economic news, German business sentiment deteriorated more than expected in June, according to a survey released on Monday by the Ifo Institute.

The business climate index fell to 88.5 from 91.5 in May, coming in below consensus expectations of 90.7.

The expectations index declined to 83.6 in June from 88.3 the month before - the lowest level since November 2022 - while the current situation index printed at 93.7, down from 94.8.

The manufacturing index fell to -9.9 in June from -0.6 in May, while the service sector gauge was 2.7, down from 6.8. The index for trade slipped to -20.2 from -19.1 and the construction index deteriorated to -20.1 from -18.5.

In equity news, shares in SBB surged as the Swedish property company said it was selling the remaining 51% of its education unit.

Reporting by Frank Prenesti for Sharecast.com