Europe midday: Stocks weaker as banks come under pressure
European stocks were on the back foot on Wednesday, with banks across the continent under pressure as investors eyed the fate of the world's oldest lender, Banca Monte dei Paschi di Siena.
At midday, the benchmark Stoxx Europe 600 index fell 0.29% to 360.28, France's CAC was down 0.5% to 4,825.46. London's FTSE 100 was weaker by 0.14% to 7,033.89, Germany’s DAX was flat at 11,460.26 and Milan’s FTSE MIB was lower by 0.62% at 19,128.04.
As we head towards the Christmas break, volumes on the Euro Stoxx 50 were 42% below the 10-day average, while volumes on the DAX and the CAC were 50% and 37% below, respectively. Volumes on the FTSE MIB were down nearly 90% compared to the 10-day average.
Spreadex’s Connor Campbell said: “Over in the eurozone the DAX failed to do much of anything, while the CAC fell by nearly half a percent. The main focus in the region was Monte dei Paschi, which saw trading suspending for the umpteenth time in recent weeks thanks to the reveal that the world’s oldest bank could run out of liquidity in the next four months.”
Shares in Monte dei Paschi di Siena were in the red but well off earlier lows after Italy's lower house of parliament and Senate approved a government request to borrow up to €20bn to underwrite the country's beleaguered banking sector.
Earlier, shares in the bank were suspended after they fell 17% as it warned that its liquidity is expected to run out in four rather than 11 months’ time.
UniCredit, Intesa Sanpaolo and Mediobanca were all down more than 1%.
On Tuesday, Monte dei Paschi was said to have raised €500m in a voluntary debt-to-equity offer, which was well below its €5bn target.
Over in Spain, bank stocks also dropped after the European Court of Justice ordered lenders to repay billions of euros earned on floor clauses in mortgage deals before May 2013.
Caixabank was down 3.82%, Banco de Sabadell fell 4.18%, Popular tumbled 6.32% and Liberbank plummeted 10.28%.
Over in London, Royal Bank of Scotland and Barclays were among the banks fined CHF99m (£78m) by the Swiss competition regulator for interest rate rigging in four separate cartels.
The Competition Commission of Switzerland also fined JP Morgan Chase and Citigroup, Deutsche Bank, Société Générale and Credit Suisse.
In other corporate news, Italian broadcaster Mediaset rose 1.44%, extending gains from the previous session after Vivendi upped its stake in the company to more than 25%.
Swiss drug maker Actelion was up 5.99% following reports that takeover talks with France’s Sanofi were progressing.
Meanwhile, oil prices advanced, with Brent crude up 0.55% to $55.66 per barrel and West Texas Intermediate up 0.54% to $53.59. Still to come, investors will eye data from the US Energy Information Administration.