A slide in banking shares on Friday pulled European stocks from a two-week high, while investors assessed valuations and corporate earnings after the recent rally stalled amid falling oil prices.
Banco Santander SA fell 3.2 percent and Deutsche Bank AG lost 2 percent, with concerns over the health of lenders reigniting as the European Central Bank said that five institutions under its supervision missed a key capital ratio last year.
Credit Suisse Group AG lost 2 percent after Milan prosecutors were said to be probing whether it engaged in money laundering and evaded taxes. Allianz SE weighed on insurers, falling 1.3 percent after quarterly profit missed estimates.
Seadrill Ltd led a retreat in energy stocks as oil slid.
The STOXX 600 slipped 0.8 percent to 326.08 at the close of trading, after earlier falling as much as 1.5 percent and rising 0.3 percent. The gauge is down 11 percent this year amid concerns ranging from global growth and the deepening oil slump, to the capital strength of lenders and dissipating faith in central bank support.
“The banking sector is still under stress,” said John Plassard, senior equity-sales trader at Mirabaud Securities LLP in Geneva. “I’m not sure the market is convinced until they see the results of the stress test that the system is solid. People that benefited from the strong rally are taking a bit of profit and the barrel is going a bit lower and impacting the energy sector.”
Still, the STOXX 600 posted a 4.5 percent advance this week, its biggest in more than a year. It has rebounded 7.5 percent from a 29-month low on Feb. 11, when it hit so-called oversold territory. STOXX 600 members trade at about 14.4 times estimated earnings, down from a multiple of 16.7 in April.
A measure of European share volatility rose for a second day on Friday. Capital Group Cos, the money manager with US$1.4 trillion in assets, expects volatility to remain elevated amid a slowing global economy and uncertainty about central bank policies.
Among other stocks moving on corporate news, Ingenico Group SA tumbled 12 percent after JPMorgan Chase & Co downgraded the French payments-processing company, saying its earnings-margin forecast for this year is below the broker’s estimates.
Volkswagen AG slid 3.2 percent, pulling auto-related stocks lower. Pipe-maker Tenaris SA and BHP Billiton Ltd led a drop in commodity-related stocks as some metals fell.
EON SE slid 4.5 percent in late trading as Germany’s largest utility said the downturn in the energy industry is a “reality check” for its investment strategy and dividend policy in coming years.
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