BLBG: Spanish Bank Declines Keep European Stocks Away From 2016 Gain
Lenders in Spain slumped after losing a court ruling, hampering a rally in European stocks that has pushed it closer to erasing its losses for the year.
Banco Popular Espanol SA tumbled 6.7 percent for the worst performance in the Stoxx Europe 600 Index. A ruling by the European Union’s top court in favor of borrowers means it may, along with other Spanish lenders, have to give back billions of euros to mortgage customers. Banco de Sabadell SA and CaixaBank fell at least 4 percent. The Stoxx Europe 600 Index fell 0.1 percent at 9:06 a.m. in London, with the volume of trading about a third lower than the 30-day average.
Italian lenders also fell. Banca Monte dei Paschi di Siena SpA tumbled 12 percent. The stock is heading for a three-day slump of 22 percent on concern it may fail in its efforts to raise 5 billion euros ($5.2 billion) of funds.
“Whilst an undertone of traditional year-end bullishness remains, the outstanding issue of Monte dei Paschi’s rescue, be it via bailout or recapitalisation, remains a hindrance on extension of the current Santa rally,” Accendo Markets analysts Mike van Dulken and Henry Croft wrote in a note.
The Stoxx 600 has rallied 5.6 percent in December, on track for its best monthly gain since October 2015 and 1.3 percent away from erasing its 2016 decline.
Strategists expect the benchmark to end 2017 at 366, 1.3 percent higher than Tuesday’s close, according to the average of 9 estimates compiled by Bloomberg.
While analysts see profit at the benchmark’s firms declining 2.2 percent this year, they expect a growth of 12.5 percent in 2017.
