By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Much of Europe's stock markets came
under pressure on Monday after investors got 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 0.3% to 294.64 after closing on
Friday at a 41/2 -year high of 295.55. The index has now closed
higher for three straight 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
industrial output and retail sales softening and inflation rising.
See: China inflation climbs; other indicators soften
U.S. stock markets opened lower on Monday, also weighed by that
China data. Read: U.S. stock indexes in mild retreat
"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 from 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 the downgrade of Italy that
"reinforcing 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.
As investors got a first chance to react to the downgrade,
Italian banks led some of the biggest decliners of the day, with
Banca Popolare dell'Emilia Romagna SCA down 3.7% and Mediobanca
Banca di Credito Finanziario SpA down 3.6%. UniCredit SpA fell 1.8%
and Intesa Sanpaolo SpA dropped 1%.
The FTSEMIB Italy index fell 0.5% to 16,113.90.
The index was supported by Fiat Industrial SpA , up more than 1%
after analysts at Deutsche Bank lifted the shares to buy from
hold.
Among other peripheral markets, the Spain IBEX 35 index was off
the most, down 1% to 8,536.10. Shares of Banco Santander SA (SAN)
fell 1.3%. And BBVA SA (BBVA) fell 0.8% 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, was off by 2.5%. 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 was up 0.2% to 6,493.95, with shares of Royal
Bank of Scotland Group PLC (RBS) down 2% and Barclays PLC (BCS) off
2.4%. Supporting the index, shares of Vodafone PLC (VOD) rose
1%.
Other indexes registered some mild losses. The German DAX 30
index fell 0.2% to 7,968.05, with shares of Bayer AG off 1% 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%.
Autos such as Volkswagen AG also contributed to that index's
weaker tone, with those shares down 2%. Autos were also off in
Paris, with Renault SA losing 1%. China is a big market for auto
makers and news of any weakening in the economy can weigh on
related stocks.
The French CAC 40 index fell 0.4% to 3,826.03, with Veolia
Environnement SA down 3% after Goldman Sachs cut the shares to
neutral from buy. Shares of Credit Agricole SA fell 1.7%.
On the upside, shares of ArcelorMittal SA rose 1.6% after UBS
lifted the steelmaker to buy from neutral.
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