Europe open: Stocks lower on Turkish lira crisis, summer holiday fears
European shares opened the week in downbeat mood as the plunging Turkish lira and weak travel stocks hit markets.
The pan-European STOXX 600 fell 0.25% by 0846 GMT having been 0.5% lower at the opening. Britain's FTSE 100, down 0.41%, was also hit by supply problems with AstraZeneca’s Covid vaccine and the threat of an EU block on exports of the drug amid an ongoing row over contracts with the Anglo-Swedish firm.
Sentiment was battered as the Turkish lira fell to a record low after President Tayyip Erdogan replaced a hawkish central bank governor with a critic of high interest rates over the weekend.
Euro zone banks exposed to Turkey, such as Spain’s BBVA, Italy’s UniCredit, France’s BNP Paribas, and Dutch bank ING all suffered share price falls.
Travel stocks also dropped fell on reports of extended lockdowns in Italy, Germany and France in an effort to stymie the Covid-19 pandemic and UK officials warned against summer holidays in an effort to consolidate the interim success of Britain’s vaccination rollout.
"While the prospect of a big European restart on the summer holidays front was always a long shot, events over the weekend have made the prospect even more remote, as the prospect of a third wave across Europe pushes the prospect of any sort of economic restart into the back end of Q2," said CMC Markets analyst Michael Hewson.
"Meanwhile, as European share trading gets set for a new week, the various missteps in the EU’s response to its vaccination program could well be compounded by reports that the bloc is considering various measures to shore up its supply chain, including the blocking of vaccine exports to the UK."
Shares in budget airline easyJet fell 7.3%, Ryanair followed suit, down 5.9%. Deutsche Lufthansa, TUI, Carnival and Aeroports de Paris were all in the red.
British retailer Kingfisher rose 3.6% after it reported a sharp rise in full-year profit, driven by the popularity of do-it-yourself projects.