Hochtief tumbles after warning of possible 2011 loss
MADRID (MarketWatch) — European stock markets fell Monday in the wake of comments by German Chancellor Angela Merkel and lackluster economic data, while Italian stocks erased all the gains they won after the country appointed a new leader over the weekend.
The Stoxx Europe 600 XX:SXXP -0.55% fell 0.9% to 238.89 after taking initial inspiration from news that former European Commission member Mario Monti was tapped by Italy’s president to form a new government. That came a day after Prime Minister Silvio Berlusconi resigned and the government passed a debt-cutting budget bill. Read more in Italy politics
U.S. stock futures pointed to a slightly lower opening for Wall Street later, though Asian stocks gained on Italy’s weekend news. U.S. stocks closed higher for a fourth day out of five on Friday.
German Chancellor Angela Merkel said in a speech at a party congress on Monday that it was time to create a “new Europe“ by completing political union, according to media reports.
She also again rejected the notion of selling bonds jointly backed by euro-zone countries.
“Although she has said this before, choosing to reiterate that now is not very helpful because it sends a message which implies that Germany does not want to be on the hook for the periphery,” said John Ventre, fund manager at Skandia Investment Group.
“She clearly does not want to go down in history as being responsible for the collapse of the euro, but at the same time she does not seem willing to consider the one policy which would be certain to save it, and I don’t think the market likes being reminded of that,” said Ventre.
Also, economic data out of Europe showed a plunge in industrial production for September. The 2% fall was in line with expectations, said analysts at Capital Economics, but they said the data support the view the region will “soon fall back into another fairly deep recession.”
Italy
Italy’s FTSE MIB index XX:FTSEMIB -0.57% was off 1.31% to 15,557.4, after gaining more than 2% earlier on the heels of weekend political news. Unione de Banche Italiane SCpA IT:UBI +1.42% rose nearly 3%, and Banco Popolare SC IT:BP +0.77% rose 2.7%.
However, 10-year Italian bond yields IT:5YR_ITA +3.23% were creeping higher on Monday. The government sold €3 billion ($4.1 billion) in five-year bonds, but borrowing costs rose in a reflection of tension from recent weeks. The yield on those bonds jumped to 6.29% from 5.32% in a previous sale last month.
Read MarketWatch’s Market Extra on the “Monti bounce”
In the Stoxx 600, German construction group Hochtief AG DE:HOT -10.65% was the top decliner, slumping nearly 10% after the group said global economic and financial turmoil had caused delays in the sale of its airports operating business. The group said it could report a loss for 2011 if the sale of that unit doesn’t go through this year.
The German DAX 30 index DX:DAX -0.47% fell nearly 1% to 5,997.26, with shares of utilities RWE AG DE:RWE -1.90% and E.On AG DE:EOAN -1.67% off 2.4% and 2%, respectively.
Auto group Volkswagen AG DE:VOW3 -0.81% fell 1.8%, while BMW AG DE:BMW -0.50% fell 1.3%. In Paris, Peugeot SA FR:UG -2.45% fell more than 2%.
Sportswear maker Adidas AG DE:ADS +1.93% led on the upside with a 1.8% rise. The company is due to release a new soccer shoe in Europe on Tuesday that enables wearers to compare speed and movement with top athletes, according to a report by Bloomberg News. The company could not immediately be reached for comment.
In Paris, the France CAC 40 index FR:PX1 -0.80% fell 1.1% to 3,121.69. Drinks group Pernod Ricard SA FR:RI -2.87% fell 2.8% and retailer Carrefour SA FR:CA -2.17% lost 2%.
The FTSE 100 index UK:UKX -0.36% fell 0.5% to 5,515.64, with most stocks losing ground. Heavyweight Barclays PLC UK:BARC -1.17% BCS -1.49% fell 2.3% after Goldman Sachs cut it to sell from neutral on worries over higher regulatory costs.
Standard Chartered PLC UK:STAN -1.57% fell 2.3%.
On the upside, shares of commercial broadcaster ITV PLC UK:ITV +3.61% rose nearly 3% after it said it was on track to outperform the TV advertising market in 2011.
