European Stocks Drop After January Advance as Spanish Banks Fall




8:11 AM CET
February 2, 2015

(Bloomberg) -- A drop in Spanish lenders pushed European stocks lower for a third day amid growing concern that anti-austerity parties are gathering strength.

The Stoxx Europe 600 Index dropped 0.3 percent to 366 at 1:50 p.m. in London after earlier rising as much as 0.3 percent and falling 0.7 percent. Spain’s IBEX 35 Index slid the most among 18 western-European markets. Energized by Syriza’s victory in Greece, the leader of its anti-austerity party Podemos pledged to restructure the nation’s debt if he can convert his opinion-poll lead into election victory. Italy’s FTSE MIB Index declined as much as 1.1 percent, reversing gains of 0.5 percent after a presidential vote over the weekend.

“I still worry about the lack of reforms in Europe and the fact that investment is not really happening,” said Andrea Williams, who helps oversee about $123 billion at Royal London Asset Management in London. “Greece will be a continuing problem, which will concern markets until they come to some agreement. The more concerning issue would be if the anti-austerity parties gained votes in the bigger economies like Spain and Italy.”

The IBEX 35 fell 2 percent, with Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA down more than 1.8 percent. Telefonica SA dropped 3.3 percent after El Confidencial reported it plans to sell as much as 5 billion euros ($5.7 billion) of shares.

Italian Elections

In Italy, Prime Minister Matteo Renzi has also been a vocal opponent of budget rigor policies imposed by the European Union. His candidate Sergio Mattarella was elected as the nation’s new president in elections this weekend.

Greece’s ASE Index rebounded 3.8 percent following a 13 percent plunge last month, with a gauge of banks rallying 7.2 percent after reaching a record low last week.

Finance Minister Yanis Varoufakis said the nation needs the European Central Bank’s help to keep its banks afloat. Greece wants a new deal with its official creditors by the end of May and won’t take more aid under its existing bailout agreement, he said. German Chancellor Angela Merkel is unlikely to agree to a bilateral meeting with Premier Alexis Tsipras at a EU summit next week, a government official said.

The Stoxx 600 is falling after jumping 7.2 percent in January, its best start to a year since 1989 as the ECB announced an asset-purchase program. It ended last week 1.4 percent away from a seven-year high. By contrast, the Standard & Poor’s 500 Index lost 3.1 percent for its worst month in a year.

Ryanair, EasyJet

Among stocks moving on corporate news, Ryanair Holdings Plc lost 5.5 percent after saying earnings growth next year will be modest because of its fuel-hedging policy. Peer EasyJet Plc fell 4.8 percent.

Julius Baer Group Ltd. rallied 7.1 percent after saying it will cut costs by 100 million Swiss francs ($108 million) as a surge in the currency may crimp profit.

CRH Plc gained 4.5 percent. Holcim Ltd. and Lafarge SA agreed to sell 6.5 billion euros of assets to the Irish building-materials company to overcome antitrust demands and proceed with their planned merger.

Holcim added 2.3 percent and Lafarge climbed 0.7 percent.

Energy companies in the Stoxx 600 rose 2.4 percent as a group after a 3 percent drop last week. Banks lost 1.1 percent.

The volume of Stoxx 600 shares changing hands was 17 percent greater than the 30-day average, data compiled by Bloomberg show.

To contact the reporter on this story: Inyoung Hwang in London at This email address is being protected from spambots. You need JavaScript enabled to view it.

To contact the editors responsible for this story: Cecile Vannucci at This email address is being protected from spambots. You need JavaScript enabled to view it. Namitha Jagadeesh