By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Europe's stocks ended mostly lower
Monday after investors were rattled by a weak batch of Chinese data
and a downgrade for Italy that came at the end of last week.
The Stoxx Europe 600 index fell 0.1% to 295.26 after closing on
Friday at a 41/2 -year high of 295.55. The index has gained ground
for three consecutive weeks.
Friday's run was inspired by stronger-than-expected U.S.
nonfarm-payrolls data. But markets on Monday were contending with
some headwinds, as data from China over the weekend showed growth
in industrial output and retail sales softening and inflation
rising. See: China inflation climbs; other indicators soften.
U.S. stocks opened lower on Monday, also pressured by China
data, then turned mixed. See: U.S. stocks waver after Chinese
data.
"I think it's quite a healthy reaction to the newsflow...because
European growth data was also quite weak," said Frances Hudson,
global strategist for Standard Life Investments. French industrial
production dropped against expectations for a rise.
"China disappointed on consumption and industrial production,
suggesting they're struggling to get the economy rejigged with
greater focus on consumption, I'd have been more concerned if the
market had gone up," Hudson said.
Friday's downgrade of Italy's sovereign-credit rating to
BBB-plus from A- minus also weighed. Fitch cited an inconclusive
outcome to last month's parliamentary elections, which the ratings
firm said will complicate an already deep recession. See: Fitch
downgrades Italy to BBB plus.
Stephen Pope, managing partner at Spotlight Ideas, said the main
concern for markets Monday was that the downgrade reinforced "the
perception that the nation, post the recent election, is
ungovernable and that a second election is all but certain."
"This carries huge implications for labor-market and general
economic reform in the third largest economy of the currency bloc,"
he said in emailed comments.
Italian banks led some of the biggest decliners of the day, with
Banca Popolare dell'Emilia Romagna SCA down 4.4% and Mediobanca
Banca di Credito Finanziario SpA down more than 5%. UniCredit SpA
fell 1.2% and Intesa Sanpaolo SpA dropped 0.7%.
The FTSEMIB Italy index fell 0.7% to 16,091.98.
The index was underpinned by Fiat Industrial SpA , which rose
0.3% after analysts at Deutsche Bank lifted the shares to buy from
hold.
Among other peripheral markets, the Spain IBEX 35 index fell
0.9% to 8,554.40. Shares of Banco Santander SA (SAN) fell 1.4%. And
BBVA SA (BBVA) fell 0.5% even as analysts at Société Générale
upgraded it to hold from sell.
Banks came under pressure elsewhere on Monday. Shares of DNB ASA
, Norway's biggest bank, dropped 2.4%. The bank reportedly said
late last week it will raise lending rates to clients to pass on
tougher rules by the government aimed at cooling off housing
markets.
But that came as London's own banks fell after the Parliamentary
Commission on Banking Standards urged the government to lift the
capital banks hold against their loan books.
The FTSE 100 index gained 0.3% to close at 6,503.63, with shares
of Royal Bank of Scotland Group PLC (RBS) down 1.6% and Barclays
PLC (BCS) off 2.2%. Supporting the index, shares of Vodafone PLC
(VOD) rose 0.8%.
Other indexes registered some mild losses. The German DAX 30
index declined less than 0.1% to 7,984.29, with shares of Bayer AG
off 1.2% after analysts at Citigroup removed the health-care firm
from their Focus List Europe.
But weaker banks remained a theme. Shares of Deutsche Bank AG
fell 1.1%.
The French CAC 40 index fell 0.1% to 3,836.27, with Veolia
Environnement SA down 2.6% after Goldman Sachs cut the shares to
neutral from buy. Shares of Credit Agricole SA fell 0.9%.
On the upside, shares of ArcelorMittal SA rose 0.9% after UBS
lifted the steelmaker to buy from neutral.
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