Sun, Nov 09, 2014 - Page 15 News List

EU stocks falter as Greek banks tumble, tech sector declines

Bloomberg

European stocks fell from a five-week high to post a weekly drop as bank shares slumped amid signs the region’s common supervisor is tightening scrutiny.

The STOXX Europe 600 Index slid 0.5 percent to 335.25 at the close on Friday. Sixteen of the 19 industry groups on the benchmark gauge dropped, led by technology companies and Greek banks. Stocks briefly pared losses as a report showed US payroll gains exceeded 200,000 for the ninth month.

The STOXX 600 climbed on Friday after European Central Bank President Mario Draghi said policymakers are unanimous on boosting monetary stimulus if needed.

“A move higher for European stocks has to come from exporters and banks,” said Luca Paolini, London-based chief strategist at Pictet Asset Management Ltd.

“Banks are such a big part of the index, but even after all that the ECB has done, lending and bad loans remain a key problem. We’re finally seeing some improvement in European earnings and I think we’re really close to bottoming out,” Paolini added. “The economic recovery is fragile, but market sentiment has really changed in the past weeks.”

National Bank of Greece SA, Piraeus Bank SA and Eurobank Ergasias SA dropped at least 9 percent on Friday, pushing a gauge of banks to the worst week in almost four months. Greece’s ASE Index declined 5.4 percent, posting the biggest slide among national benchmark indices in western Europe.

Also falling on Friday was Frankfurt’s DAX and Paris’ CAC 40, which both dropped 0.9 percent as the FTSE 100 in London edged up 0.3 percent.

The European Central Bank will change the oversight culture in the region, supervisory board member Andreas Dombret said in a speech in Frankfurt, Germany.

The vigilance will become more quantitative and the monetary authority will eventually test banks’ business models, Dombret added.

Separately, media reported that the central bank has tightened liquidity checks for banks after taking over as the common supervisor on Tuesday.

Investors are looking for more evidence the world’s largest economy can sustain growth after the US Federal Reserve ended bond purchases last month.

Additional reporting by staff writer

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