MW: Oils, banks drive Europe stocks to broad losses
IMF chief’s arrest casts shadow over ministerial meeting
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Oil stocks fell on commodity price declines Monday, while banks also pressured Europe, amid jitters about sovereign debt and with the arrest of the head of the International Monetary Fund casting a shadow over a key meeting of euro-zone finance ministers.
The Stoxx Europe 600 index ST:STOXX600 -0.47% fell 0.7% to 278.61 in afternoon trading, setting markets up for a third straight decline. Not helping sentiment, U.S. stocks futures pointed to losses for Wall Street, while Asia stocks also fell. Read Futures point to lower start for Wall Street
The Greece ASE Composite index XX:COMPO +0.09% fell around 2%, with shares of National Bank of Greece SA NBG -2.15% off nearly 2.5% and EFG Eurobank Ergasias SA down 2.4%.
The finance ministers are meeting in Brussels primarily to endorse a bailout plan for Portugal, but Greece’s debt predicament will likely be discussed as well.
Meanwhile, Dominique Strauss-Kahn, the IMF’s managing director, was likely to be arraigned on Monday in New York on charges including attempted rape and criminal sexual assault of a maid at a Manhattan hotel, according to reports. Strauss-Kahn wasn’t only closely involved with resolving the euro-zone debt crisis, he was seen as a favorite in France’s presidential elections next year. Read more about how Strauss-Kahn’s arrest shakes French politics.
Frances Hudson, global thematic strategist with Standard Life Investments, said the situation involving Strauss-Kahn was affecting sentiment somewhat, “just because he might not be able to do the negotiations going foward and he has been involved in the past.
“Since the IMF and the [European Union] seem to be partnering on any support packages, it actually does matter that there’s somebody who knows the whole process.”
The French CAC 40 index FR:PX1 -1.08% sank 1.3% to 3,968.48, with shares of Credit Agricole SA FR:ACA -2.30% down nearly 2.4% and BNP Paribas SA FR:BNP -1.60% losing 2%. French banks have substantial exposure to Greece, Hudson pointed out.
Banks were also off in Germany, with Commerzbank AG DE:CBK -4.40% tumbling 4.9% and Deutsche Bank AG DE:DBK -0.98% trading down 2.1%. The German DAX 30 index DX:DAX -0.71% fell 1.1% to 7,322.46.
Edmund Shing, equity strategist at Barclays Capital, said investors are also weighing recent earnings reports from European banks. The results were very mixed, with underlying profit growth “not impressive at all and credit growth slow” and with market activity volumes low, he noted.
“On the banking side of things, there’s not a whole lot to get excited about,“ said Shing, adding that borrowing costs are also a worry. “People are concerned that European banks have a lot of capital-raising ahead. ... As spreads widen out, bond issuance by banks becomes more expensive.”
On the upside, meanwhile, shares of Deutsche Boerse AG DE:DB1 +4.50% jumped nearly 5% after NASDAQ OMX Group Inc. NDAQ +2.01% and IntercontinentalExchange Inc. ICE +5.72% withdrew their joint bid for NYSE Euronext Inc. NYX -10.37% , citing regulatory issues.
The bid had been viewed as an attempt to dislodge plans — announced in February — for Deutsche Boerse and NYSE Euronext to merge.
Also in exchange news, shares of London Stock Exchange Group PLC UK:LSE +7.19% jumped over 7% after Canadian exchange operator TMX Group Inc. TMXGF +9.17% received a rival bid from a consortium of Canadian banks and pension funds. In a statement over the weekend, the LSE said it is committed to a deal with TMX on previously-agreed terms.
Autos, oil stocks also weigh
Auto stocks were also contributing to losses for Europe. Shares of Volkswagen AG DE:VOW3 -1.67% fell 2.5%, Daimler AG DE:DAI -1.58% was off 1.8% and BMW AG DE:BMW -0.65% slid 1.5%. In Paris, shares of Renault SA FR:RNO -2.42% fell 2.9%.
Oil stocks were also adding to pressure on Europe Monday, with oil prices off 80 cents at $98.84 for the June crude oil contract CLM11 -0.61% . Shares of Total SA TOT -0.10% FR:FP -1.06% off 1.1%, Royal Dutch Shell PLC RDS.A -0.30% UK:RDSA -0.58% down nearly 1% and BP PLC BP -0.23% UK:BP -1.09% losing 1% as well.
BP is also nearing a deadline to complete its share-swap deal with Russia’s Rosneft.
In London, the FTSE 100 index UK:UKX -0.40% fell 0.7% to 5,883.91. ARM Holdings PLC UK:ARM -1.88% slipped 2% and banks also weighed, with Royal Bank of Scotland Group PLC RBS -1.44% off 2.1% and Lloyds Banking Group PLC UK:LLOY -0.86% down 1.6%.
On the upside, shares of Autonomy Corp. UK:AU +3.11% jumped 4.8% after Boston-based Iron Mountain Inc. IRM +2.16% said it has agreed to sell certain digital solutions to the U.K. provider of infrastructure software for $380 million.
