Europe open: Italian stocks under pressure on report of possible fine from Brussels

Italian stocks are coming under selling pressure as investors react to reports that Brussels may be set to slap a fine on Italy over its public finances.

Elsewhere on the Continent, small gains at the opening bell were giving way to moderate losses, with investors continuing to mull the implications of the past weekend's elections to the European parliament.

Reports on Monday had indicated that the European Commission could initiate a disciplinary procedure against Rome as soon as 5 June and although Brussels had never imposed a fine on any euro country because of excessive government spending, the news had weighed heavily on Italian government debt on Monday.

As of 0918 BST, the benchmark Stoxx 600 was drifting lower by 0.27% to 375.64, alongside a drop of 0.50% to 12,011.38 for the German Dax, while the FTSE Mibtel was off by 0.98% to 20,163.67.

In parallel, the yield on the benchmark 10-year Italian government note was rising by three basis points to 2.71%, having jumped by 13 points during the prior session.

Commenting on the results of the European elections meanwhile, Neil Wilson, chief market analyst at Markets.com, told clients: "The gains for the right continue to point to a problem for Brussels. But there were also big gains for the Greens. The political landscape is shifting, but it wasn’t a Brexit-like earthquake."

Shares in Renault and Fiat were trading slightly lower following the prior day's surge on news of their proposed merger which, if successful, would result in the creation of the world's third largest carmaker.

Stock in SAS was unwanted after the Swedish airline group reported a second quarter loss of 1.22bn krona, which was more than twice the 488m krona of red ink recorded one year ago (consensus: SEK808m).

On the economic front meanwhile, the latest reading on German consumer confidence revealed that sentiment in the euro area's largest economy resumed the slight downward trend which had been in place since the beginning of 2018.

GfK's consumer confidence index for German dipped from May's downwardly revised reading of 10.2 to 10.1 for June.

Nonetheless, Claus Vistesen at Pantheon Macroeconomics believed that the survey continued to point to "decent" growth in consumer spend overall, although he expected a slowdown to materialise in the second quarter.

Euro area money supply growth meanwhile picked up in April to reach an annualised pace of 4.7% (consensus: 4.4%) after 4.6% in March.