Europe open: Stocks little changed; Italian banks tumble
European stocks were little changed early on Monday as investors continued to mull over the implications of Britain’s decision to leave the European Union, with trade expected to be quieter than usual as US markets will be closed for Independence Day.
At 0900 BST, the benchmark Stoxx Europe 600 index and Germany’s DAX were both down 0.1%, while France’s CAC 40 was 0.2% weaker.
At the same time, oil prices nudged higher. West Texas Intermediate was up 0.3% at $49.13 a barrel and Brent crude was also 0.3% firmer, at $50.48.
Markets received a boost at the end of last week after Bank of England governor Mark Carney said interest rates were likely to be cut over the summer.
Mike van Dulken, head of research at Accendo Markets, said the theme this week was almost certainly going to remain about the continued fallout from Brexit as market participants continue to digest and re-price for the new financial, economic and political landscape.
"Any more hints from central banks about stimulus could also help keep the ball in the air, helping markets shrug off the Brexit impact and push on with their recoveries.”
Chancellor George Osborne told the Financial Times that he plans to cut corporation tax to ensure businesses keep investing in the UK after it opted to leave the European Union.
He said he would cut the tax rate to below 15% from the current 20%, which would make it the lowest of any major economy.
Osborne said the move was part of his new five-point plan to build a "super-competitive economy" with low tax rates and said it was important for "Britain to "get on with it" show investors it was still "open for business".
In terms of sector, the Stoxx 600 basic resources index was up 2% as metals prices rose, with London-listed Fresnillo surging 8% as silver prices broke through $21 an ounce.
On the downside, however, Italian banking stocks were under the cosh. Banca Monte dei Paschi di Siena took a beating following a report in daily La Repubblica that the European Central Bank has written to the lender asking for a new three-year business plan that would require it to reduce non-performing loans to an adequate level.
Italy's FTSE MIB significantly underperformed its peers, down 1%.
Prime Minister Matteo Renzi said on Monday that Italy has no plans to defy EU rules by pumping billions of euros of public money into its banks, denying a report in the Financial Times.
Elsewhere, beleaguered German car maker Volkswagen was in the red after chief executive Matthias Muller rejected compensation calls for European customers in the wake of the emissions scandal.
Deutsche Boerse and London Stock Exchange were in focus as the latter was set to hold a general meeting for shareholders to vote on their recommended all-share merger.