MW: Europe stocks fall, led by Italian banks and BP
UBI Banca off more than 10% after capital raising; Next shares gain
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stocks fell Tuesday, with Italy’s UBI Banca SpA leading banks lower after it announced plans to raise capital, while BP PLC slipped after a broker downgrade and fresh lawsuit concerns.
The Stoxx Europe 600 index (ST:STOXX600 275.42, -0.82, -0.30%) slipped 0.3% to 275.53, following a gain of 0.08% in the prior session.
Simon Brown, CEO of ProSpreads, said markets are trading in a sideways pattern looking for a catalyst, with not much conviction behind the moves.
“I can see the markets trading back up again this afternoon,” said Brown. “Ultimately, we’re waiting for Friday’s (nonfarm payroll) numbers from the U.S. before we find any proper economic direction.”
He said investors remain concerned about Japan, with news earlier this morning that plutonium had been found in samples of soil taken at the damaged Fukushima Daiichi nuclear plant.
“We would be trading higher, but it’s capped by what’s happening there,” he said.
U.S. stock futures pointed to a slightly higher start for Wall Street. See more on stocks in the spotlight before the U.S. open.
Italian bank woes
The biggest loser on the Stoxx 600 was UBI Banca (IT:UBI 6.19, -0.69, -10.04%) , shares of which tumbled more than 10%.
Late Monday, the Italian bank reported a fourth-quarter net loss and said it would increase share capital by as much as 1 billion euros ($1.4 billion). That news triggered a couple of broker downgrades.
Nomura cut the lender to reduce from neutral, saying in a note: “Considering the doubtful rationale around the capital hike, we believe investors will start to price in an M&A discount on the stock’s valuation.”
Societe Generale analysts lowered UBI Banca to sell from hold, citing low visibility of future profitability — noting no guidance from management and low delivery. “The risk to the upside comes from a sharp interest rates increase, to which UBI is largely geared,” the brokerage noted.
UBI Banca’s news weighed on other Italian banks. Banca Popolare di Milano (IT:PMI 2.66, -0.17, -6.07%) lost 6.3%, Banco Popolare SC (IT:BP 2.11, -0.14, -6.21%) fell 7%, and Intesa Sanpaolo SpA (IT:ISP 2.21, -0.09, -3.84%) and UniCredit SpA (IT:UCG 1.81, -0.06, -3.36%) each fell 3.5%.
The FTSE MIB index (XX:FTSEMIB 21,758, -251.51, -1.14%) sank 1.3% to 21,716.19 in Milan.
