Europe stocks’ rally dim as banks drop, oil gains

London - European stocks faltered after reaching the highest level in almost a year, as banks dragged indexes lower. Oil extended its advance and the dollar weakened against most of its major peers.

Spanish banks fell after a ruling in the European Union’s top court that may result in them handing back billions of euros to mortgage customers.

Italy’s Banca Monte dei Paschi di Siena fell on concern it may fail in its efforts to raise €5bn of funds and after it said its liquidity may turn negative in four months.

Oil traded above $53.50 a barrel as data showed US stockpiles declined last week. The yen strengthened and the dollar slid from the highest since 2003 versus the euro.

Volumes are thinning and swings in global equities are muted, with a volatility gauge for European equities at the lowest since 2014.
 
Equities have been rising to new highs on the prospects for increased government spending in the US after Donald Trump won the November 8 presidential election.

Mohamed El-Erian and his former colleagues at Pacific Investment Management Company say now’s a good time to take advantage of the latest rallies in global financial markets and scale back from risk.

"It makes total sense to take some money off the table," El-Erian, the chief economic adviser at Allianz SE and a Bloomberg View columnist, said on Tuesday.

"We’ve priced in no policy mistakes. We’ve priced in no market accidents, and we’ve ignored all sorts of political issues," he said on Bloomberg TV. In October, El-Erian said that he held about 30% of his own money in cash.

Stocks

The Stoxx Europe 600 Index fell 0.1% at 9:35 in London. The gauge closed at its highest level since December 2015 on Tuesday.

A gauge of European banks led decliners, falling 0.5%. Futures on the S&P 500 Index were little changed.

The gauge rose 0.3% to 2 266.5 on Tuesday, a point below its all-time high. The Dow Jones Industrial Average closed at an unprecedented 19 974.62

Currencies

The yen gained 0.3% to 117.56, after falling 0.7% on Tuesday. The euro added 0.1% to $1.0403, after touching an almost 14-year low of $1.0352 yesterday.

The Bloomberg Dollar Spot Index was little changed after climbing for two straight days.

The measure’s gain for the quarter is 7.6%, heading for the biggest three-month advance since the third quarter of 2008.

Bonds

Yields on 10-year Treasury notes fell less than one basis point to 2.55%, after gaining two basis points on Tuesday. Germany’s 10-year bund yields dropped two basis points to 0.25%.

Commodities

Oil climbed 0.7% to $53.69 in New York. Crude inventories dropped by 4.15 million barrels, the American Petroleum Institute was said to report.

Data from the Energy Information Administration on Wednesday is also forecast to show supplies shrank.

Gold rose 0.2% to $1 135.55 an ounce, after closing near a 10-month low on Tuesday.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
USD/ZAR
14.06
+0.1%
GBP/ZAR
19.72
+0.3%
EUR/ZAR
17.13
+0.2%
AUD/ZAR
11.05
+0.2%
JPY/ZAR
0.13
+0.1%
Gold
1,831.32
0.0%
Silver
27.45
0.0%
Palladium
2,929.64
0.0%
Platinum
1,256.50
0.0%
Brent Crude
68.28
+0.3%
Top 40
62,573
+1.4%
All Share
68,520
+1.4%
Resource 10
71,474
+2.1%
Industrial 25
86,856
+0.9%
Financial 15
12,711
+1.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 1388 votes
No, I did not.
52% - 3467 votes
My landlord refused
27% - 1840 votes
Vote