European Markets Slide; Italian Banks Fall

Nigel Thomas
29 Mar, 2011
New York City

European markets drifted lower in the early trading and indexes in Germany and France dropped more than 0.6% but trimmed the losses in the afternoon. Italian banks dropped after UBI Banca planned 1 billion euros of capital addition ahead of the European stress test.

[R]2:00 PM Frankfurt – European markets drifted lower in the early trading and indexes in Germany and France dropped more than 0.6% but trimmed the losses in the afternoon. Italian banks dropped after UBI Banca planned 1 billion euros of capital addition ahead of the European stress test.[/R]

European markets were under pressure after Italian banks led the decliners in the region.

Investors are also worried that Portugal may face higher interest cost as the nation without the government prepares to rollover debts of 9 billion euros in the next three months.

Crude oil futures prices declined for the third day in a row after Libyan rebels advanced and supplies are expected to be restored as early as this week.

However, energy companies in Europe traded lower after BP Plc is expected to face manslaughter charges over its Gulf of Mexico oil spill.

DAX 30 index in Frankfurt declined 0.5% to 6,901.45 and CAC 40 index in Paris declined 0.2% to 3,969.08 and the benchmark index in Milan dropped 1.4% to 21,700.

UBI Banca said it will raise one billion euros in capital ahead of European Central Bank stress test this year and to meet the revised guidelines of Basel III banking rules.

Stock Movers

Italian banks declined sharply after UBI Banca’s planned capital raising plan.

Intesa Sanpaolo SpA dropped 3.8% to €2.21 and Unicredit SpA dropped 3.3% to €1.82.

Trading in mutual banks was suspended several times in Milan trading after stocks drifted lower. Banca Popolare di Milano declined as much as 6% and Banco Popolare dropped 7%.

Total SA declined 0.09% to €42.60 and BP Plc dropped declined 2.3% to 466.20 pence. Eni SpA was unchanged at €17.31.

Airlines traded higher after crude oil prices declined for the third day in a row. Deutsche Lufthansa rose 1% to €14.21 and Air France KLM rose 0.6% to €11.80.

Arcelor Mittal increased 0.4% to €25.64 and Siemens AG decreased 0.8% to €93.55.

Automakers traded mixed in Europe. Porsche Automobil Holding SE declined 3.3% to €58.06 and PSA Peugeot Citroen SA declined 2 cents to €27.51.