By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stock markets pared the worst of their losses on Monday afternoon, but still traded in the red as investors moved into the second week of the U.S. debt-negotiation stalemate and shutdown, with the weekend offering no hope for a near-term resolution.
The Stoxx Europe 600 index XX:SXXP -0.28% , down nearly 1% at one point, fell 0.3% to 308.89, touching levels not seen since early September. The index closed out last week with an 0.7% loss.
The decliners outpaced gainers. LVMH Moet Hennessy Louis Vuitton SA FR:MC -1.36% FR:MC -1.36% fell more than 1.5%. In a report published Sunday, Reuters said analysts are growing increasingly concerned about the luxury group’s brands and are worried these won’t be able to provide alternative growth now that cash cow Louis Vuitton has fallen on tough times.
Shares of Burberry Group PLC UK:BRBY -1.41% fell 1.5% after Chief Executive Angela Ahrendts warned in an interview with Les Echoes that the Chinese slowdown may be the new reality rather than a temporary lull.
Weekend interviews with top politicians and a warning from Treasury Secretary Jacob Lew that Congress is “playing with fire” if it doesn’t increase the debt ceiling in time only increased investors’ anxiety about the U.S. budget stalemate and looming deadline to raise the country’s debt ceiling.
“The news that U.S. politicians have again put self-interest ahead of the greater good of the country by failing to make any progress in sorting out the budget or tackling the debt ceiling will have surprised few,” said Alastair McCaig, market analyst at IG. “The US debt markets have remained calm, but the closer we get to the mid-October deadline, the less likely that is to remain the case,” he said.
One bright spot for Europe was Italy, with the FTSE MIB Italy index XX:FTSEMIB +0.76% up 0.4% to 18,387.61. Towards the close of markets on Friday, Italian stocks rallied on news a Senate panel had voted to expel former Prime Minister Silvio Berlusconi. Banks in Italy were the biggest gainers in Europe, with UniCredit SpA IT:UCG +2.68% up 1.2% and Banca Monte dei Paschi di Siena SpA IT:BMPS +6.03% up over 4%.
The French CAC 40 index FR:PX1 -0.07% pared a loss of around 0.7% back to flat, trading at 4,160.05. Shares of European Aeronautic Defense & Space EADS NV FR:EAD +2.22% rose over 2% after its Airbus SAS unit won a $9.75 billion deal for its jetliners with Japan Airlines Co. JP:9201 +3.01% in Tokyo. Losses for LVMH weighed on the index.
The German DAX 30 index DX:DAX -0.38% was off 0.3% to 8,595.31, weighed by a 1.2% drop for Siemens AG DE:SIE -1.18% SI -0.89% , a nearly 2% drop for Bayer AG DE:BAYN -1.59% DE:BAYN -1.59% and a 1% drop for Deutsche Bank AG DE:DBK -1.96% .
Shares of SAP AG DE:SAP -2.09% SAP -2.36% fell 1.8% after a Reuters article said the business software group was one of a number of companies talking to BlackBerry Ltd. BBRY +3.42% BBRY +3.42% about buying all or part of the struggling handset maker. SAP declined to comment to Reuters for the article.
London, the FTSE 100 index UK:UKX -0.33% fell 0.3% to 6,434.10, driven by a 0.7% drop for HSBC Holdings PLC UK:HSBA -0.75% HBC -0.90% and a 1% fall for Vodafone PLC UK:VOD -1.15% VOD -0.65% .
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.
