Italy drags European markets lower; Norsk Hydro shares rise 5%

Posted by On 4:40 AM

Italy drags European markets lower; Norsk Hydro shares rise 5%

European markets were lower Monday afternoon, as investor confidence took a knock from last week's spike in Treasury yields.

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The pan-European Stoxx 600 was down almost 1 percent during lunchtime deals, with almost all sectors and major bourses in negative territory.

Europe's banking index was among the worst sectoral performers, down more than 1.5 percent amid renewed fears over Italy's budget plans. The FTSE MIB index slipped over 2.3 percent during early afternoon deals, with government bond yields hitting fresh highs.

The EU reiterated concerns over Italy's budget plans over the weekend, saying it is worried Rome's plans breach what it asked the country to do earlier this summer. In response, Italy said it would "not retreat" from its current spending plans.

The news appeared to ratchet up the pressure on the country's already fragile banking sector, with Unicredit, Ubi Banca and Banco BPM trading over 4 percent lower Monday afternoon.

Looking at individual stocks, Norway's Norsk Hydro surged to the top of the European benchmark after the aluminum firm got a key permit to help it restart its Alunorte refinery at half-capacity. Shares of the Oslo-listed stock rose 5 percent on the news.

Trade tensions

Over in Asia, shares dipped broadly after the People's Bank of China said it would cut the amount of cash that banks are required to hold as reserves. The move comes amid concerns about the economic impact of trade tensions and import tariffs between China and the U.S.

Chinese stocks in particular fell sharply after mainland markets opened for the first time in a week after the country celebrated Golden Week. Traders also digested purchasing managers' index (PMI) data out of China Monday, which showed a fast-growing services sector but rising cost pressures and lower employment.

Investors will be keeping an eye on U.S. markets on Monday amid fears of rising interest rates. Comments by U.S. Federal Reserve Chair Jerome Powell last week about the U.S. central bank's interest rate hiking path sent Treasury yields to multi-year highs. And key nonfarm payrolls data showed a worse-than-expected increase in jobs รข€" but a fall in the unemployment rate to 3.7 percent, the lowest level in almost five decades. The economic data, alongside Powell's comments, sent shares stateside lower Friday, with the S&P 500 posting its worst weekly performance since September 7.

On the political front, U.K. Prime Minister Theresa May got a boost Sunday after Japanese Prime Minister Shinzo Abe told the Financial Times that he would welcome Britain into the Trans-Pacific Partnership agreement "with open arms" after Brexit. And EU officials have become growingly optimistic about the possibility of a Brexit deal being reached, with European Commission President Jean-Claude Juncker saying an agreement could be struck by November.

However, surveys released by Deloitte and the British Chambers of Commerce on Monday showed that uncertainty is still weighing on British businesses, putting exports, recruitment and investments under pressure.

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Not a Scientific Survey. Results may not total 100% due to rounding.

Source: Google News Italy | Netizen 24 Italy

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