The majority of the European markets ended Monday's session with modest losses. After the strong rally last week, some profit taking was to be expected. Last week's rally was sparked by the release of some rather large news announcements, including the European Central Bank's bond purchase plan and the implementation of a third round of quantitative easing by the U.S. Federal Reserve.
The new trading week has begun with little market moving news. There were a number of upgrade and downgrades from the brokerages and a profit warning from SSAB of Sweden. The warning from SSAB put pressure on the rest of the steel companies. Mining stocks also turned in a weak performance Monday.
The European finance ministers' meeting in Cyprus on Saturday failed to find a consensus over the European Commission's proposal on the banking union. Countries, including Germany, have aired differences over the timetable for the single supervisory mechanism.
Direct recapitalization of Cypriot banks through the European Stability Mechanism (ESM) should start at the beginning of next year, European Central Bank Governing Council member Panicos Demetriades reportedly said in an interview to German daily Handelsblat.
"It would be very important" for Cyprus that the ESM directly recapitalize the country's banks by January 2013, Demetriades, who also heads Cyprus' central bank, told the daily.
The policymaker said he expects the Eurozone and the International Monetary Fund to conclude a review on the expected aid package by October, adding that the country may need external funding for up to five years.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.47 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.23 percent.
The DAX of Germany fell by 0.11 percent and the CAC 40 of France decreased by 0.78 percent. The FTSE 100 of the U.K. dropped by 0.37 percent and the SMI of Switzerland finished down by 0.10 percent.
In Frankfurt, ThyssenKrupp declined by 4.73 percent. UBS downgraded its rating on the stock to "Sell" from "Neutral."
Credit Suisse downgraded its rating on Deutsche Bank to "Underperform" from "Neutral." The stock finished up by 0.40 percent and Commerzbank gained 3.32 percent.
Gerry Weber was downgraded to "Neutral" from "Buy" by Merrill Lynch. The stock is dropped by 3.14 percent.
In Paris, Vivendi declined by 1.86 percent. UBS downgraded the stock to "Sell" from "Neutral."
HSBC downgraded Societe Generale to "Neutral" from "Overweight." The stock gained 1.13 percent. Credit Agricole rose by 0.79 percent, while BNP Paribas added 0.51 percent.
Shares of ArcelorMittal fell by 2.91 percent. Steel stocks were under pressure following the profit warning from Sweden's SSAB.
In London, Vodafone dropped by 1.25 percent. The telecom giant might make a provision of $2.2 billion to cover some tax risks in India, as a result of a law change in the South Asian country, Bloomberg reported, citing an interview with its Chief Financial Officer Andy Halford.
BT Group finished lower by 2.06 percent. Exane BNP downgraded the stock to "Neutral" from "Outperform."
Unilever increased by 1.02 percent, after UBS upgraded the stock to "Buy" from "Neutral."
Mining stocks turned in a weak performance Monday. Anglo American fell by 2.28 percent and BHP Billiton lost 1.15 percent. Rio Tinto also decreased by 2.00 percent.
JJB Sports sank by 23.33 percent. There were reports that nearly half of the sports goods retailer's stores may be closed and around 2000 jobs may be eliminated after its takeover deal with Sports Direct International concludes.
The Eurozone current account surplus declined in July largely due to a fall in trade surplus, the European Central Bank said Monday. The surplus fell to a seasonally adjusted EUR 9.7 billion from EUR 14.3 billion in June.
The euro area trade surplus increased in July despite a fall in exports, official data showed Monday. The latest decline in exports, after two straight months of increase, suggests that it will act as a drag on the activity in the third quarter. The trade surplus rose to EUR 15.6 billion from EUR 13.6 billion in June, Eurostat said. Economists had forecast a surplus of EUR 15 billion.
Eurozone labor costs increased 1.6 percent year-on-year in the second quarter of 2012, data released by Eurostat showed Monday. The increase was in line with expectations and followed a 1.5 percent gain in the first quarter.
Conditions for New York manufacturers have deteriorated at an accelerated rate in the month of September, according to a report released by the Federal Reserve Bank of New York on Monday, with the index of activity in the sector falling to its lowest level in over three years.
The New York Fed said its general business conditions index fell to a negative 10.41 in September from a negative 5.85 in August, with a negative reading indicating a contraction in regional manufacturing activity. Economists had been expecting the index to climb to a negative 2.0.
by RTT Staff Writer
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