Economic news

European Shares Sink as Banks Resume Selloff, Credit Suisse Hits new Low

  • Bank stocks lead declines, hit 10-week low
  • Inditex and H&M slide following results
  • TotalEnergies falls as refinery strike enters day 8
  • UK spring budget eyed later in the day

March 15 (Reuters) - European shares fell on Wednesday as bank stocks resumed their selloff, after a short-lived bounce in the previous session, with Credit Suisse plunging to a fresh record low.

The pan-European STOXX 600 index fell 2.5% by 1118 GMT, languishing at 10-week lows, as was the banks sector index after plunging nearly 6%.

The bank index is set to lose more than 120 billion euros ($127.26 billion) in market value since the close of March 8.

Spain and Italy's lender-heavy indexes fell almost 4% each.

Shares of Credit Suisse fell below 2 Swiss francs ($2.18) after the lender's biggest shareholder said it could not raise its 10% stake, citing regulatory issues. The market regulator halted trading in the stock several times as volumes soared and the stock plummeted.

There was also a cooling of optimism that the U.S. Federal Reserve will tone down its rate-hiking spree next week in the aftermath of Silicon Valley Bank's (SVB) collapse.

"It doesn't feel as if SVB at the moment is deflecting central banks, or at least the Fed from it's designed to keep pressing hard against inflation," said Russ Mould, investment director at AJ Bell.

"Some of that early-year optimism (that) we would get a cooling in inflation .. (and) that we get a pivot in rates ... might not come to pass."

All eyes will now be on the European Central Bank, which is still leaning towards a half-percentage-point rate hike on Thursday, despite turmoil in the banking sector, as they expect inflation will remain too high in coming years, a source told Reuters.

Retailers shed 5.0% after shares of Zara-owner Inditex, the world's biggest fashion retailer, fell 5.2% as it flagged higher investment spending.

H&M, the world's second-biggest fashion retailer, slid 8.1% after a smaller-than-expected increase in sales over the December to February period came as the latest sign that it is struggling to compete with Inditex.

UK finance minister Jeremy Hunt will present the spring budget later in the day. London's FTSE 100 index fell 2.3%.

Prudential fell 10.3%. The Asia-focused insurer reported a rise in full-year year profit, while Chief Financial Officer James Turner said it had a $1 million exposure to Silicon Valley Bank, which was 'minimal' against a total debt book of $23 billion.

TotalEnergies slid 4.5% after some 42% of operators at its French refineries and depots continued their strike for an eighth day over the government's planned changes to its pension system. ($1 = 0.9430 euros)

Reporting by Shreyashi Sanyal and Amruta Khandekar in Bengaluru; Editing by Eileen Soreng and Savio D'Souza

Source: Reuters

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