Carlsberg down after earnings; CSR sinks after Zoran deal
By Aude Lagorce, MarketWatch
LONDON (MarketWatch) — European shares declined on Monday as investors nervously watched tensions spread across the Middle East and North Africa.
The Stoxx Europe 600 index (ST:STOXX600 289.17, -1.87, -0.64%) lost 0.7% to 288.95 in late morning trading.
The benchmark finished flat on Friday, though it closed at its highest level since August 2008 on Thursday.
Among the top regional indices, France’s CAC 40 (FR:PX1 4,128, -29.36, -0.71%) fell 0.8% to 4,123.66 and Germany’s DAX 30 (DX:DAX 7,374, -52.58, -0.71%) dipped 0.8% to 7,368.77. Investors shrugged off positive euro-zone economic data. Read more about the continuing economic boom
The U.K.’s FTSE 100 index (UK:UKX 6,066, -17.31, -0.29%) fell only 0.4% to 6,060.83 as several of its miners got a boost from the rally in gold and silver prices. Gold for April delivery surged above $1,400 an ounce in electronic trading on Globex.
U.S. markets are closed for Presidents Day on Monday.
Bahraini protesters prepare demands for royals
In Bahrain on Saturday night, crowds swelled into Pearl Square in the capital Manama after troops and riot police were ordered to withdraw. On Sunday, the opposition is expected to put its demands to the crown prince. Video courtesy of Sky News.
Over the weekend unrest in the Middle East and North Africa spread to Morocco for the first time, defying predictions the 1,000 year-old monarchy would likely be spared calls for greater democracy. Crowds marched in the capital of Rabat this weekend, asking for changes.
Meanwhile, in Libya fierce clashes between protesters and security forces left at least 233 people dead, according to Human Rights Watch, which cited hospital sources.
Severe restrictions on foreign media have made it very hard to verify details about the situation in Libya.
Italian stocks slump
The escalation of violence in Libya had repercussions on Italy’s FTSE MIB, which fell 2% to 22,598. Italy is one of the European countries with the closest ties to Libya. Companies with significant exposure to the dictatorship include aerospace and defense firm Finmeccanica SpA (IT:FNC 9.37, -0.12, -1.21%) , energy giant ENI SpA (IT:ENI 17.54, -0.83, -4.52%) and bank UniCredit SpA (IT:UCG 1.92, -0.06, -3.03%) . On Monday, ENI shares slumped 4.2% and UniCredit fell 3%.
The escalating violence in Libya also had an impact on oil prices, as it sparked concerns over a potential disruption to crude supplies from the North African nation. Crude futures rallied, with the Brent benchmark climbing 1.8% to top $104 a barrel. Read more about oil.
“What’s happening in the Middle East and North Africa has got to be a major factor weighing on the markets these days. We realize that it’s going to put pressure on oil prices. The fear from an investor’s point of view is how much further could it spread,” said Peter Dixon, strategist at Commerzbank.
Still, he highlighted that the only real cause of concern for investors should be the impact of the unrest on oil prices, because most of the countries affected are small, underdeveloped economies, with little debt, and so there is little risk to the financial systems of the Western world.
“The only thing that is going to matter in the short term is oil,” he said. “Aside from oil, the risk to Western economies is relatively marginal.”
