Eurostoxx 50: 2,675.38 (–19.91) Frankfurt DAX: 7,220.12 (+5.38) Paris CAC: 3,726.59 (–24.64): EUROPEAN STOCKS slid yesterday and posted their biggest weekly loss since March, with peripheral European shares knocked lower ahead of results from Europe's bank stress tests which came out after the bell.
“All Italian banks have passed the test. This is reassuring for the euro zone, and the overall number of banks that have failed the test seems somewhat lower than what the market had expected,” Saxo Banque trader Geraud Missonnier said. “Overall we don’t see much impact from this on the equity market; it’s been priced in.”
Daiwa Capital Markets credit analyst Michael Symonds said. “With only eight banks failing and the requirement for these banks to raise €2.5 billion, it wasn’t the solution to restore confidence. What was needed was for more banks to fail and for more capital to ultimately be raised. That said, I don’t think people expected that outcome.”
The FTSEurofirst 300 index of top European shares closed 0.2 per cent lower at 1,086.90, posting a weekly loss of 2.5 per cent.
Europe’s banking index shed 1 per cent, with Commerzbank down 3 per cent and Credit Agricole down 3.1 per cent ahead of the stress test results.
Investors turned instead to defensive stocks, with Sanofi rising 1.3 per cent and GlaxoSmithKline adding 0.9 per cent.
Ageas, an insurer, retreated 16 per cent. Axa, Europe’s second largest insurance company by market value, lost 11 per cent.
Technology shares sank 6.5 per cent for the biggest drop among the 19 industry groups in the Stoxx 600 as Temenos tumbled 30 per cent. The banking software provider yesterday reduced its full-year outlook for licence revenue, saying it now expects growth of 5 per cent to 10 per cent.
Software AG, Germany’s second largest maker of business software, fell 22 per cent after reporting second-quarter sales that missed analysts’ estimates due to currency moves and its failure to sell licences.
L’Oreal, the world’s largest cosmetics maker, slipped 5.9 per cent.
Waertsilae Oyj fell 15 per cent. The world’s biggest maker of ship engines and power plants said its full-year sales would contract because of weaker marine-service markets. – (Reuters/Bloomberg)
