Europe midday: Stocks lower on Trump concerns; banks decline

European stocks were trading lower on Monday as doubts over US president Donald Trump’s agenda crept in.

At midday, the benchmark Stoxx Europe 600 index fell 0.5% to 374.61, Germany’s DAX was down 0.76% to 11,973.06 and France’s CAX was 0.29% weaker at 5,006.30.

In currency markets, the euro was up 0.63% versus the dollar to 1.0866 and 0.27% weaker against the pound to 0.86327.

On Friday, Republican leaders withdrew their support for Trump’s healthcare bill, which was supposed to repeal Obama’s Affordable Healthcare Act, due to lack of support in Congress, raising doubts about his ability to deliver on plans for tax cuts and infrastructure spending.

Bank stocks were some of the biggest fallers after having benefitted from Trump's reflation trade. Lloyds Banking Group fell 2.03%, UBS was down 1.99%, Société Générale lost 1.13% and Deutsche Bank declined 0.71%.

Investors were also mulling election news in Germany and France. German Chancellor Angela Merkel secured her biggest victory in thirteen years in a regional vote in Saarland, strengthening her position before the general election on 24 September.

“German bund yields spiked down at the open in Frankfurt, as investors rushed into the German sovereign papers on Merkel hopes”, said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

In France, far-right candidate Marine Le Pen warned that the “EU will die” as the clock celebrated its 60th anniversary over the weekend, and said that a euro exit would not be chaotic for the country. According to a Bloomberg poll, the odds for a Le Pen victory fell to 25%

A Le Pen victory is “considered as a tail-risk by the global markets and is being priced to a very tight extent across the board,” Ozkardeskaya added.

Market participants were also looking ahead to Wednesday, when British Prime Minister Theresa May will trigger Article 50 and kick off two-year formal divorce proceedings with the EU.

Meanwhile, oil prices were moving lower, with Brent Crude down 0.55% to $50.53 per barrel and West Texas Intermediate 0.79% lower at $47.59, after an unscheduled OPEC meeting over the weekend, where the cartel of major producers announced that they would stick to their plan to reduce production and said cuts could be extended up to six months.

On the data front, German business confidence unexpectedly improved in March. The Ifo's business climate index rose to 112.3 from 111.1 in February, beating expectations for a reading of 111.0 and hitting its highest level since July 2011.

The expectations index pushed up to 105.7 from 104.2, surpassing expectations of 104.0.

In corporate news, Lufthansa fell 2.84% after rival Ryanair chief Michael O'Leary told a German weekly that in three years' time his carrier will increase market share in Germany to 20%.

Ryanair flew 0.55% lower despite Bank of America Merrill Lynch upgrading the stock to 'neutral' from 'underperform', while British Airways and Iberia parent International Consolidated Airlines slid 3.37% after a double downgrade to 'underperform'.

Old Mutual was down 1.53% after striking a deal to offload almost half of its stake in its asset management business for $446m.

Gold miners Randgold Resources and Fresnillo were lifted 0.91% and 0.65%, respectively, as gold extended gains to $1,259 an ounce, just shy of the closely monitored $1,260 level, the yellow metal's 200-day moving average.