Banks a bright spot as European stocks decline

European equities fell for a third day, their longest streak in almost a month, on renewed concern about the strength of the economy, even as banks rebounded.

While almost 500 companies in the Stoxx Europe 600 Index declined, HSBC Holdings Plc rose 3.8 per cent after announcing it will buy back $2.5 billion of its own shares. Societe Generale SA climbed 2.8 per cent and Credit Agricole SA gained 2.5 per cent after reporting a jump in quarterly profit, boosted by the sale of stakes the French banks had in Visa Europe Ltd.

ING Groep NV jumped 6.8 per cent as the biggest Dutch lender said second-quarter profit more than tripled. Tire manufacturer Continental AG fell 4.1 per cent, dragging automakers lower, after posting revenue that missed analyst projections.

Benchmark gauge

The Stoxx Europe 600 Index slipped 0.3 per cent at 8.55am in London after dropping 1.9 per cent in the past two days to a three-week low. Following the biggest monthly surge since October, concerns resurfaced about the strength of the economy amid falling oil prices and profits at lenders. The benchmark gauge has lost 8.6 per cent this year and remains lower than its level from before the UK vote on European Union membership, while US and Asian equities have already recovered.

“We’ve seen some weakness in banks in the past couple of days as investors didn’t really buy the results of the stress tests but today there’s some easing of the headwinds after some results came in better than expected,” said Christoph Riniker, the Zurich-based head of strategy research at Julius Baer Group Ltd.

“There’s still too much uncertainty in Europe for there to be sustained gains. You have the banking issues, Brexit is weighing on sentiment, there’s questions about economic growth, so we will continue to see a volatility.”

Among other stocks moving on corporate news, Aggreko slumped 13 per cent after the Scottish engineer reported a decline in revenue and profit. German publisher Axel Springer SE fell 2.3 per cent after posting sales that missed estimates. Millennium & Copthorne Hotels Plc lost 2.3 per cent as pretax earnings dropped.

Bloomberg