European Stocks Slide Amid Italy Spat as Global Sell-Off Resumes
(Bloomberg) -- European equities fell, led by banks, as the Italian budget dispute continued to weigh on markets and the global sell-off in stocks resumed.
The Stoxx Europe 600 Index declined 1.1 percent, poised for a 7.2 percent drop this month. No sector escaped the red zone on Tuesday. Traders are watching earnings results, with Renault down 3.8 percent after third-quarter revenue declined. Ingenico retreated 4 percent after cutting its full-year guidance in a surprise statement.
All eyes are on Italy as the European Commission will likely decide today on whether to formally demand that Italy retract, revise and resubmit its budget, a step it has never taken before. European banking stocks have been under pressure as Italy’s spending targets far exceeded EU limits and it has ignored repeated warnings over the size of its deficit.
“We’re reaching peak stress in the Italian budget situation and that ugly tail risk carries a lot of headlines which in turn can drive flows,” said John Roe, head of multi-asset funds at Legal & General Investment Management Ltd. “Italy’s dangerous game of chicken is weighing heavily on Euro-zone risk, as evidenced by the banks’ underperformance.”
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