European stock markets were volatile on Friday, with banks up on speculation of a short-selling ban, while miners were among those adding downward pressure.
The Stoxx Europe 600 (XX:SXXP) -0.57% fell 0.5% to 240.36, after dropping 1.1% on Thursday to a new closing low for the year. Set for a fifth day of losses, the index is down nearly 5% for the week.
Banks rose across the region amid talk of a European ban on short-selling. Deutsche Bank AG DB +1.90% (DE:DBK) -1.44% rose 2.3% and BNP Paribas SA (FR:BNP) +3.51% rose 4.6%. Shares of Banco Santander SA (ES:SAN) +3.37% STD +4.16% , which was among 16 Spanish institutions downgraded by Moody’s Investors Service late Thursday, rallied 4%
The downgrade comes as the market is already worried about contagion from Greece, as fresh elections loom for June and analysts question whether the country could exit the euro.
A report in Spanish daily Cinco Dias said Spanish banks were going to ask regulator CNMV to reinstate a ban on short-selling of domestic banks. A spokeswoman for the regulator said there had been no changes. A spokesman from the European Securities and Market Association could not immediately be reached for comment.
Spain’s IBEX 35 index (XX:IBEX) +0.45% rose 1% to 6,607, with shares of beaten-down Bankia SA (ES:BKIA) +22.78% soaring 22%. Shares of the recently nationalized lender have lost 15% this week, amid rumors of depositors withdrawing funds.
“When they announced that the government would partially nationalize Bankia and inject money, people said, look at the stock, there’s no dividend, hardly any value, let’s go short,” said Predrag Dukic, senior equity sales trader at CM Capital Markets in Madrid.
“A lot of funds went short out of this fear of a short-selling ban and are now covering their positions,” said Dukic. But he and other analysts said it’s questionable how effective the last such ban was.
“We don’t really feel that this is the answer,” said Mike Lenhoff, chief strategist at Brewin Dolphin.
Italy’s FTSE MIB index (XX:FTSEMIB) +0.20% jumped 1.5% to 13,287.86, led by UniCredit SpA (IT:UCG) +2.64% surging 4.3%, and Intesa Sanpaolo SpA (IT:ISP) +1.31% up 3%.
The Athens General Index (GR:GD) +2.40% rose 0.9% to 541.09, with National Bank of Greece SA NBG +4.08% up over 5%.
Lenhoff said markets were also likely encouraged by the first poll in Greece since the recent elections, which showed the two parties that supported the international rescue earlier this year would get the majority they needed to put together a governing coalition. Fresh elections will be held June 17. Worries about Greece have been undermining the market.
“If we see another poll that demonstrates exactly the same thing, the electorate could be moving in favor of more established parties. The prospect of a less-hostile concession certainly diminishes the risk of Greece leaving,” said Lenhoff.
Wall Street futures were trading higher with the initial public offering of Facebook Inc. FB 0.00% being the event of the day.
Lenhoff said if U.S. markets can stay positive, Europe stocks could end a rough week higher.
Meanwhile, China’s growth worries were hitting mining and other sectors. Media outlets said a report from China’s State Information Center, a government think-tank, said annual growth could slow to 7.5% in the second quarter, owing to property sector curbs and global headwinds.
The resource-heavy FTSE 100 index (UK:UKX) -0.78% dropped 0.7% to 5,300.60, with shares of Rio Tinto PLC (UK:RIO) -1.23% RIO -0.31% down 1.5% and Anglo American PLC (UK:AAL) -0.37% dropping 0.9%.
Banks in London also stuck to negative territory, even as European counterparts rose. Shares of HSBC Holdings PLC (UK:HSBA) -1.54% HBC -0.97% fell 0.8% and Barclays PLC (UK:BARC) -2.58% BCS -0.44% dropped 1.7%.
Drinks makers were under pressure in London, with Diageo PLC (UK:DGE) -2.23% (UK:DGE) -2.23% down 2% and SABMiller PLC (UK:SAB) -1.82% off 2%.
The French CAC 40 index (FR:PX1) +0.10% was flat at 3,013.38, with Pernod Ricard SA (FR:RI) -3.20% dropping 2.8% and luxury-goods groups LVMH Moet Hennessy Louis Vuitton (FR:MC) -1.43% and PPR SA (FR:PP) -2.14% down 1.7% and 2.3%, respectively.
China is a major market for luxury-goods and drinks companies.
The German DAX 30 index (DX:DAX) +0.09% was flat at 6,306.53, led by a 2% drop for Volkswagen AG (DE:VOW3) +0.54% and a nearly 2% fall for sportswear maker Adidas AG (DE:ADS) +0.38% .
Also lower, shares of Stoxx 600 heavyweight H&M Hennes & Mauritz AB (SE:HMB) -2.63% dropped 2%.