European bourses slip after Wall Street pull back

Thursday 09:20 GMT

Overview

European stock indices are slipping back, following Wall Street’s lacklustre lead. The Dow Jones Industrial Average moved further away from the 20,000-point milestone overnight, while the US is also cooling after its strong run higher.

Hot topic

European banking stocks are under scrutiny. It comes after news that Monte dei Paschi di Siena is to be rescued by the Italian state using a new €20bn bailout package.

The government rescue, which had long been resisted in Rome, is designed to draw a line under the slow-burn crisis in Italian banking that has alarmed investors and become the main source of concern for European financial regulators.

Italian financials are higher, though Monte dei Paschi itself has been volatile. It is now up 3.1 per cent in mid-morning trade, having fallen by over 6 per centper cent after a delay in the time taken for its opening price to hit the screens. UniCredit, Italy’s biggest lender, is up 1.1 per cent and Generali is up 0.6 per cent. Mediobanca is also 0.6 per cent stronger.

Overall, the index tracking the Italian banking sector is 0.8 per cent higher, while the wider pan-regional Euro Stoxx banking index is down 0.1 per cent.

Italy’s FTSE MIB is outperforming its peers, climbing 0.6 per cent overall.

Equities

The FTSE 100 is down 0.2 per cent, while the Xetra Dax 30 in Frankfurt is down 0.2 per cent. The region-wide Euro Stoxx 600 is down 0.2 per cent.

Japanese shares continue to track the strong yen, with exporters under pressure. The benchmark Topix was down 0.4 per cent, while the Nikkei 225 fell 0.4 per cent.

Hong Kong’s Hang Seng is down 0.8 per cent, while China’s Shanghai Composite inched up 0.1 per cent.

On Wednesday, Wall Street indices went into retreat. The benchmark S&P 500 was down 0.2 per cent while the Dow Jones Industrial Average pulled back from a record high, dropping 0.2 per cent and delaying a possible maiden advance through the 20,000 point milestone. Futures trade is pointing to a further slip at the US open, predicting a 0.1 per cent retreat that would take the Dow to around 19,874 points.

Forex

The US dollar index is down 0.1 per cent at 102.89, facing its first back-to-back decline in three weeks. It is still up 1.4 per cent so far this month and 4.4 per cent this year. The euro is up 0.2 per cent at $1.0446, while the pound is up 0.1 per cent at $1.2357.

The yen is steady at ¥117.58 per dollar, after strengthening by 0.3 per cent on Wednesday. The Japanese currency is 2.7 per cent weaker so far this month but has still gained 2.2 per cent over the course of the year.

Commodities

Oil prices are steady, with Brent crude down 0.1 per cent at $54.43 a barrel and West Texas Intermediate up 0.1 per cent at $52.52.

Gold is up 0.1 per cent at $1,132.05 an ounce.

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