Jun 7, 2017

European Stocks Little Changed as Santander Acquires Popular

European stocks held on to a two-day drop ahead of key events including the U.K. general election and the European Central Bank policy decision, while Banco Santander SA inched lower after taking over ailing peer Banco Popular Espanol SA.


The Stoxx Europe 600 Index lost less than 0.1 percent at 08:33 a.m. in London. The Euro Stoxx 50 Index dropped as much as 0.4 percent, falling below its 50-day moving average, before recovering some of the decline. Shares have retreated since Friday as investor appetite for risk assets waned in a week full of geopolitical risk events.

  • Santander fell as much as 3.4 percent before trading 0.3 percent lower. The lender said it plans to raise about 7 billion euros ($7.9 billion) of capital as part of a deal to acquire Popular, which European regulators had determined was likely to fail. Shares of Popular were suspended by Spain's regulator.
  • Surveys of U.K. voters over the past few weeks have indicated a tightening race for Thursday's election, putting pressure on Prime Minister Theresa May's plan to bolster her majority.
  • Also in focus will be ECB President Mario Draghi's press conference following a rate decision tomorrow. The central bank will likely change the official wording of its introductory statement to acknowledge the brightening growth outlook in the euro area, according to Bloomberg Intelligence.
  • Chemical shares fell the most among Stoxx 600 groups today as Covestro AG led declines after Bayer AG cut its stake in the company.
  • Wells Fargo Asset Management is reducing its European equity holdings, switching to emerging markets where it sees faster growth bringing greater value.
  • With major risk events coming up in the latter part of the week, "investors appear to be taking some money off the table," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.

Bloomberg Markets

by Aleksandra Gjorgievska