Financial stocks in Spain and Ireland slipped in a flat European market as investors turned their attention to weaknesses in the region’s peripheries.
In Spain, BBVA fell 1.5 per cent to €8.25, while Bankinter lost 1.6 per cent to €4.42. In Ireland, Bank of Ireland fell 4.2 per cent to €0.41 while Irish Life & Permanent, the bancassurer, fell 16.2 per cent to €0.88.
“Now the market has clarity about what the Federal Reserve are doing in the US, the focus has returned to problems in the peripheral eurozone. The increasing bond yields in these countries have hit the banks as they are the ones holding much of the debt,” said Michael Hewson of CMC Markets
Banks in Spain, Portugal, Ireland, Greece and Italy have been under pressure since Franco-German proposals in October which would force bondholders to take a haircut in any future sovereign bail-outs.
The markets have also been concerned about how peripheral eurozone banks will deal with more stringent capital regulations from Basel III. Both BBVA and Santander have fallen by about 9 per cent in the past week.
The session saw the FTSE Eurofirst flat at 1,110.85, while Spain’s Ibex 35 lost 1.3 per cent to 1,029.80.
Elsewhere in the periphery, Greek banks were up as a good local election performance by the ruling socialist party quelled fears of an early general election being called. EFG Eurobank was up 5.8 per cent to €4.37, while bellwether National Bank of Greece gained 3.5 per cent to €7.66.
Lisbon-listed Banco BPI, Portugal’s third-largest bank, was up 1.6 per cent to €1.55 on reports that the Bank of China was considering taking a stake in either the bank itself or in its Angolan operation BFA.
In core Europe, Commerzbank, Germany’s second-largest lender, fell 5.2 per cent to €6.28 after third-quarter profits came in below forecasts. The bank’s strong corporate business in Germany was offset by losses in its commercial mortgages and eastern European businesses.
The Swiss bank Julius Baer fell 2.3 per cent to SFr40.58 after Bank of America Merrill Lynch downgraded the stock to “neutral” from “buy”.
In Italy, the media company owned by the Berlusconi family, Mediaset SpA, fell 1.7 per cent to €5.25 as Gianfranco Fini, a rival politician to Silvio Berlusconi, the prime minister, called for Mr Berlusconi to resign on Sunday.
Transocean, the world’s largest offshore drilling contractor and the owner of the Deepwater Horizon rig that exploded in the Gulf of Mexico, was up 4.8 per cent to SFr64.60 after the White House oil spill commission concluded that the company had not cut corners on safety for their rig.
Downgrades hit the telecoms sector, with Milan-listed Telecom Italia down 1 per cent to €1.03 after Credit Suisse cut its rating on the stock to “neutral” from “outperform”.
Alcatel-Lucent, the Paris-listed telecoms equipment maker, fell 2.7 per cent to €2.28 after Bernstein cut its rating on the stock to “underperform” from “market-perform”.
Confidence in the sector was damped by the ratings news. Belgian telecom company Belgacom was down 1 per cent to €27.45, while France Telecom fell 0.5 per cent to €17.08 and Portugal Telecom lost 0.2 per cent to €10.02.
The steel sector was boosted as the German Steel Association raised its outlook for 2010.
Thyssen Krupp was up 2 per cent to €27.85, while in France sector rival ArcelorMittal rose 1.1 per cent to €25.84.
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