European stocks slammed as euro soars, banks sag

By Yomna Yasser On May 3, 2016

European stocks were shoved lower Tuesday, hurt as the euro hit a roughly nine-month against U.S. dollar, and as bank shares drove lower following financial results in the sector.

The Stoxx Europe 600 SXXP fell 1.4% to 336.40, moving toward the lowest close since April 12, according to FactSet. No sector was higher, and basic materials SXPR oil and gas SXEP and financial SXFP shares fell by most.

Euro leaps: Equities felt the pain from strength in the euro EURUSD which rose 0.6% to $1.1598 and touched $1.16 for the first time since August, according to FactSet. The shared currency on Monday ran above $1.15 as lackluster U.S. economic data supported the view that U.S. interest rates may be held steady by the Federal Reserve.

Euro strength makes goods from European exporters more expensive to buy for holders of other currencies.

DAX down: The exporting-heavy German market was paying the price as the euro gathered steam, pulling the DAX 30 index down 1.6% to 9,960.43. The DAX was on track for its first close below 10,000 since April 12. Only shares of chemical and healthcare conglomerate Merck KGaA rose, up 0.2%.

Investors also yanked shares of some German blue-chips lower following financial results. Deutsche Lufthansa AG shares sank 6.4% as the air carrier said it may cut capacity to offset weak ticket prices. Meanwhile, luxury auto maker BMW AG BMW fell 2.8% as operating profit declined.

Banks: Most bank shares were under pressure, with Commerzbank AG CBK sliding 7.4% as first-quarter profit more than halved and as the German lender cast further doubt over its full-year outlook.

Meanwhile, UBS Group AG UBSG UBS, -0.23% shares gave up 6.4%, with the Swiss lender’s first-quarter profit declining sharply to 707 million Swiss francs ($741 million) from 1.9 8 billion francs.

But better-than-expected earnings helped push shares of France’s BNP Paribas BNP higher by 2.1%.

Indexes: France’s CAC 40 PX1 stumbled 1.5% to 4,375.27 and Italy’s FTSE MIB FTSEMIB slumped 2% to 18,055.72. Spain’s IBEX 35 IBEX was down 1.9% to 8,848.00.

The U.K.’s FTSE 100 lost 0.8% at 6,190.72.

Source: MarketWatch