Sun, Jun 03, 2018 - Page 14 News List

European shares jump into June

Reuters, LONDON

European shares on Friday breathed a sigh of relief with Italian stocks supported after a deal to form a coalition government ended three months of political deadlock and removed the risk of another general election.

The pan-European STOXX 600 rose 1 percent to 386.91, but it was down 1 percent from last week’s 391.08.

German stocks on Friday gained 0.9 percent and Britain’s FTSE 100 rose 0.3 percent.

Italian stocks rallied as much as 2.9 percent, the standout performers in Europe as Italian banks gained 3.8 percent.

Political uncertainty has roiled Italian stocks, resulting in a slide of more than 9 percent for the Italian benchmark last month, its worst month since June 2016.

Italian Prime Minister Giuseppe Conte was sworn in on Friday, heading Western Europe’s first anti-establishment government.

Investors had feared that a repeat vote could become a proxy referendum on Italy’s eurozone membership.

Shares in Italian banks Banco BPM SpA, BPER Banca SpA., UBI SpA and Intesa Sanpaolo SpA were among the biggest risers on the STOXX 600, up 3.3 to 8.5 percent after sustaining heavy losses in the previous month.

However, some market watchers remained cautious given that Italy’s anti-establishment parties, the League and the Five Star Movement, are planning to spend big.

“Pending better visibility on the new government’s actions, Italian assets may continue to price in some policy uncertainty,” UBS Wealth Management Italy chief investment officer Matteo Ramenghi said in a note.

Italian shares ended off highs, weighed down by a report that EU lawmakers from the two parties forming its new government coalition backed this week a rejected proposal to set up funds to help countries quit the eurozone.

A trader at a European bank said the decline was also triggered by technical factors and a 4.5 percent slump in Fiat Chrysler Automobiles NV shares.

Fiat Chysler’s departing chief executive officer Sergio Marchionne delivered a plan to ramp up sport utility vehicles and invest 9 billion euros (US$10.5 billion) in electric and hybrid cars in a bid to double operating profit by 2022.

Some investors who had expected news about possible spin-offs were disappointed.

Spanish equities rose 1.8 percent after socialist Spanish Prime Minister Pedro Sanchez was catapulted to power, taking over from veteran conservative former Spanish prime minister Mariano Rajoy, who lost a no-confidence vote in the wake of a corruption scandal.

Away from politics, semiconductor stocks were a weak spot after shares in Dialog Semiconductor PLC plunged 15 percent.

The chipmaker said that Apple Inc was planning on cutting smartphone power chip orders, which would shave 5 percent off Dialog’s revenues this year.

Peer AMS AG declined before recovering losses to end down 0.6 percent.

“Becoming more positive for the investment case remains difficult due to the uncertainty related to the company’s Apple business,” analysts at Baader Helvea said in a note.

Dialog’s shares have slumped nearly 40 percent so far this year, following a loss of 35 percent last year.

Deutsche Bank AG shares recovered some of the previous session’s heavy losses, climbing 2.8 percent higher following Thursday’s drop of more than 7 percent in the after a report that the US Federal Reserve last year designated the bank’s US operations to be in “troubled condition.”

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