Weak data, Italian bank woes pressure European stocks

Bloomberg

European stocks fell on weak British and eurozone manufacturing data and worries about the health of Italian banks.
Equities elsewhere were mixed, with the Dow in the US retreating slightly as oil prices fell but the tech-rich Nasdaq finishing higher. The Japanese Nikkei pushed higher for a second straight session.
London slid 0.5 percent after a survey showed Britain’s manufacturing activity has slumped to its lowest level in more than three years on the back of the country’s vote to leave the European Union. In the eurozone, Paris stocks retreated 0.7 percent and Frankfurt 0.1 percent following weak manufacturing figures for the 19-nation shared currency bloc.
The Milan stock market index ended the day 1.7 percent lower, dragged down by financials.
Italian banks performed worst in last week’s assessment by the European Banking Authority’s probe of lender resilience, but overall the sector came out reasonably well, analysts said.
“The latest EU bank stress tests confirm that, on the whole, the region’s banks are in a much healthier position than a few years ago,” Capital Economics noted.
“However, there are still significant problems in some countries’ banking sectors, most notably Italy’s. These issues will not be resolved quickly, so several banks will remain vulnerable to more severe losses of investor and depositor confidence than seen this year,” it said.
Shares in the eurozone’s troubled Italian bank, Monte dei Paschi di Siena, were saved from losses by news of a private rescue deal, lifting shares 0.6 percent.
But Italian rival UniCredit shares fell sharply, triggering a temporary suspension, before closing 9.4 percent lower.
Banco Popolare di Milano and Ubi Banca each shed over six percent.
In the US, lower oil prices pushed Dow members ExxonMobil and Chevron down by more than 3.0 percent each, leaving the blue-chip index marginally in the red.
But Apple climbed 1.6 percent and Netflix 3.4 percent, suggesting a rotation by investors into technology shares.
In Asia, Shanghai stocks lost 0.9 percent after China’s official purchasing managers’ index of manufacturing activity indicated the sector shrank last month for the first time since February.
But the Tokyo market climbed 0.4 percent as leading banking stocks continued to gain following a decision by the Bank of Japan last week to not cut interest rates further into negative territory.