European indices fall 0.5% as miners and banks weigh; debt concerns continue

<p>European sovereign debt concerns cast a shadow over European stock markets on Monday, convincing investors to trade cautiously and reduce holdings in riskier equity sectors […]</p>

European sovereign debt concerns cast a shadow over European stock markets on Monday, convincing investors to trade cautiously and reduce holdings in riskier equity sectors such as miners and heavyweight banks. This in turn sent European indices lower by around 0.5%.

Sovereign debt concerns within Europe, whilst never really disappearing from investors’ minds, have taken centre stage over the last few days, particularly with question marks remaining over the issue of Greek debt restructuring and Portugal’s financial aid being put in doubt by the vote in Finland which saw the anti-Euro party, the True Finns, gain more ground.

We also have Moody’s cutting its rating on a number of Irish banks again and whilst this may not have caused too much of a surprise, it does help to dampen sentiment as we start the week.

On top of this we have global inflationary pressures bringing potential monetary policy tightening all the more closer and so the trading has taken a rather sour taste to start the week.

In terms of individual stock movers we have seen some of the retailers make an early charge to the top of the FTSE 100 leader board this morning. Shares in ITV gained by near 2% after Jefferies International issued a positive note on the stock and upgraded its view. The firm upgraded its stance to ‘hold’ from an ‘underperform’ rating as it re-evaluates the broadcaster’s valuation. Kingfisher shares also jumped 2% higher, with the retailer trading positively on the higher retail sector.

We have also seen strong demand for European betting companies with strong online Poker foundations such as Bwin Party Digital and 888 after the US moved to close a number of providers in the US on charges of illegal gambling, money laundering and fraud. Investors see the move as giving some of Europe’s major players an opportunity for growth. Shares in Bwin Party Digital have been turbo charged by the news, rallying some 30% in early trading as traders bought back into the stock having endured heavy falls earlier this month.

On the downside, however, was Smith and Nephew after Synthes confirmed it was engaged in talks to take over Johnson and Johnson. The news has dashed investor hopes of a potential bid for Smith and Nephew by J&J, who have sold out of the firm’s shares this morning as a result. There is no definitive conclusion as of yet to the talks between Synthes and J&J but this is yet another sign of strong consolidation within the pharmaceutical sector.  Smith and Nephews shares slumped 4% as a result.

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