European stocks posted a second week of losses as a standoff between US lawmakers led to the first government shutdown in 17 years for the world’s biggest economy.
Unilever led food and beverage stocks lower, falling 3.7 percent, after posting a slowdown in quarterly sales growth. Nokian Renkaat Oyj tumbled the most in almost a year after cutting its earnings forecast.
Mediobanca SpA and Banca Popolare di Milano Scarl led a rally in Italian banks as Italian Prime Minister Enrico Letta won a confidence vote.
The STOXX Europe 600 Index fell 0.7 percent to 309.89 this week, after declining 0.6 percent in the previous five days. The gauge is still up 11 percent this year, as the EU emerged from a recession and central banks maintained stimulus measures to support the global economy.
“The US shutdown is a comment on the dysfunctional ways of US politics,” Andrew Parry, at Hermes Sourcecap Ltd in London, said in a telephone interview.
“We came out of the summer months too optimistic about Europe, so some pause for breath was needed. We saw the profit warning from Nokian Renkaat and the numbers from Unilever. I think we’ll continue to get more profit warnings going into the earnings season,” Parry said.
The US government began a partial shutdown on Tuesday after Democrats and Republicans failed to agree on a budget, closing some services and placing as many as 800,000 federal employees on unpaid leave.
A two-week halt could shave 0.25 percentage point off fourth-quarter economic growth, US Federal Reserve Bank of San Francisco President John Williams forecast.
National benchmark indices fell in 11 of the 18 Western European markets this week. Germany’s DAX retreated 0.4 percent, while the UK’s FTSE 100 lost 0.9 percent. France’s CAC 40 decreased 0.5 percent.
Italy’s FTSE MIB surged 3.7 percent, the most since July. Letta won a confidence vote on Wednesday, with support from former Italian prime minister Silvio Berlusconi, who reversed his position after initially trying to bring down the five-month-old government by withdrawing his ministers from the coalition.
Popolare di Milano surged 16 percent and Mediobanca gained 12 percent in Milan trading. UniCredit SpA, Italy’s largest lender, advanced 9.6 percent.