Europe open: Stocks little changed but Monte dei Paschi tumbles

European stocks were little changed in early trade in holiday-thinned trade, as investors continued to keep an eye on Italy’s Banca Monte dei Paschi di Siena.

At 0855 GMT, the benchmark Stoxx Europe 600 index, France’s CAC 40 and Italy’s FTSE MIB were all down 0.1%, while Germany’s DAX was up 0.1%.

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.

Oil prices gained after data from the American Petroleum Institute showed a 4.1m barrel drawdown in US crude inventories in the week ended 16 December, which was a bigger drop than expected. Still to come, investors will eye data from the US Energy Information Administration.

West Texas Intermediate and Brent crude were up 0.7% to $53.69 a barrel and $55.75, respectively.

Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor, said: “Despite the Dow reaching new highs and Asian markets rising, European markets are more muted, opening little changed as investors appear to be winding down towards Christmas. The 20,000 Dow level has been seen as a somewhat magical target for a long time, and the prospect of the Dow reaching and closing over this level will provide headlines. However, it also raises some important questions about the lofty levels of markets and their potentially complacent attitude towards potential downside risks.

“2016 has seen investors reluctantly embrace change, focusing on the positive impact of the political earthquakes that have shaken the establishment this year. Bears have been carried out, as a wave of market liquidity pounced on any downturn and squeezed the market higher. Investors who have been long equities and the dollar have had a spectacular year. However, as we head towards the New Year, whether this confidence will remain justified in 2017 is a rather more moot point.”

On the corporate front, Italy’s Banca Monte dei Paschi di Siena was in focus again. Shares in the world’s oldest bank tumbled after it cautioned on Wednesday that it could run out of liquidity in the next four months, versus a previous estimate of 11 months.

On Tuesday, the bank was reported to have raised €500m in a voluntary debt-to-equity offer, which was well below its €5bn target.

Elsewhere, Italian broadcaster Mediaset surged, extending gains from the previous session after Vivendi upped its stake in the company to more than 25%.

Swiss drug maker Actelion was also in the black following reports that takeover talks with France’s Sanofi were progressing.