European stocks end lower as M&A hopes fade
UniCredit may cut thousands of jobs; VW hit by downgrade
European stocks finished lower Monday, hurt in part by disappointment over potential merger developments for InterContinental Hotels Group PLC and auto maker Renault SA.
The Stoxx Europe 600 SXXP, -1.07% finished down 1.1% at 375.88.
“Snubbed merger rumours for InterContinental Hotels Group and Renault coupled with fears over the effect an imminent U.S. rate rise might have on global demand kept European stock markets at bay on Monday,” said Jasper Lawler, analyst at CMC Markets, in a note.
Analysts also blamed angst over Portugal, where the PSI 20 Index PSI20, -4.05% closed down 4.1% as antiausterity parties appeared on track to form that nation’s next government. In the U.S., stocks were recently trading significantly lower on Monday, with the Dow off more than 200 points and analysts blaming “the gravitational pull” of possible rate rises.
The Stoxx Europe 600 SXXP, -1.07% suffered its second in three sessions. It rose 0.3% on Friday, when shares of exporters were aided by a drop in the euroEURUSD, -0.0372% to a roughly six-month low
Among the shares struggling were those of Renault SA RNO, +2.28% They ended 3.5% lower after France’s Prime Minister Manuel Valls said the government is opposed to a merger between the French auto maker and Japan’s Nissan Motor Co.7201, -0.08% NSANY, -0.24% The companies already hold stakes in each other.
Renault shares had closed higher over the past seven sessions, the longest run of gains since mid-February, when the shares rose for nine straight days. Renault’s decline pressured France’s CAC 40 PX1, -1.46% which shed 1.5% to end at 4,911.17. The CAC endured its first loss after six sessions of wins.
Meanwhile, shares of InterContinental Hotel Group PLC IHG, -4.83% closed down 4.8% as the hotel company, whose chains include Crowe Plaza and Holiday Inn, said in a statement that “it is not considering a potential sale or merger of the company.” IHG on Friday denied press reports that it is exploring its options, Dow Jones Newswires reported. Shares finished Friday’s session higher by 6.2%.
IHG was among the biggest losers on Monday within the U.K.’s FTSE 100UKX, -0.92% index. The benchmark fell 0.9% to end at 6,295.16, though some bank stocks rose. That lift came after global financial regulators published new rules aiming to prevent banks becoming “too big to fail” that were less tough than the industry had feared.
In London, Barclays PLC BARC, +0.71% BARC, +0.71% popped up 0.7%, while Royal Bank of Scotland Group PLC RBS, +0.09% finished 0.1% higher
Germany’s DAX DAX, -1.57% fell 1.6% to end at 10,815.45. There, automotive supplier Continental AG CON, -5.30% raised its margin outlook for the year, but shares fell 5.3% for their first loss in three sessions.
Volkswagen AG VOW3, -1.20% VLKAY, -1.47% closed 1.2% lower as Fitch downgraded the auto maker’s credit rating to BBB+, lower by two notches. VW also said Monday it would offer a $1,000 goodwill package to U.S. customers whose diesel vehicles are affected by the emissions scandal.
UniCredit SpA UCG, -1.93% finished off 1.9% as earlier gains faded. That followed reports that Italy’s biggest bank by assets is considering cutting as many as 12,000 job cuts and selling off some assets. The bank is facing pressure to improve its capital.
Ericsson ERICB, +1.88% finished up 1.9% after the Swedish mobile network company reached a strategic partnership with Cisco Systems Inc. CSCO, -0.95% that could generate $1 billion in revenue for each of them by 2018.
Source: MarketWatch – European stocks end lower as M&A hopes fade
