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Bloomberg
European stocks fell on Monday, with banking shares surrendering early gains, as concern increased about the region’s political risks and as investors await European Central Bank President Mario Draghi’s testimony at the European Parliament.
The Stoxx Europe 600 Index was down 0.6 percent as of 1:56 p.m. in London, after erasing an earlier gain of 0.2 percent. The benchmark index, which has moved mostly sideways this year, is up just 0.2 percent in 2017, lagging a 2.6 percent rise in the S&P 500 Index.
Investors turned cautious on European assets including stocks, bonds and the euro after prospective French presidential candidate Marine Le Pen unveiled a manifesto pledge to take the country out of the currency bloc. The Euro Stoxx 50 index was down 0.9 percent, testing its 50-day moving average. The euro dropped 0.6 percent versus the dollar, after last week reaching its highest level since December. Shares in automakers underperformed, with the sector index falling 1.4 percent. Bank of America-Merrill Lynch equity strategists downgraded the sector to underweight, saying the recent rally looks stretched and the group faces structural challenges. Draghi’s testimony at the European Parliament’s Economic and Monetary Affairs committee is set to start at 3 p.m. local time with a statement, following which he’ll answer questions from legislators. After recently flirting with deflation, the euro-area inflation rate has quickened to 1.8 percent.