Europe close: All eyes on crunch EU summit

Date: Thursday 28 Jun 2012

- EU summit begins in Brussels
- German unemployment rises
- Bank stocks suffer in the wake of Barclays revelations

FTSE 100: -0.78%
Dax 30: -1.34%
Stoxx 600: +1.28%
Cac 40: -0.51%
Ibex 35: +0.76%
FTSE MIB: +0.5%

A mixed picture across Europe as investors awaited news from Brussels where European politicians are gathering for a summit.

Top of the agenda will be ways to reduce borrowing costs for Italy and Spain, with many wanting German agreement for so called “eurobonds”, which would be underwritten by all 17 members of the single currency union.

The German Chancellor, Angela Merkel, appeared yesterday to have ruled out such a policy but that won’t stop new French President, Francois Hollande, from asking.

Meanwhile, German unemployment rose in June by 7,000 to 2.88m, slightly more than economists had been expecting.

In Rome, Italy managed to sell €5.42bn in five- and 10-year bonds. The 10-year maturities went at a yield of 6.19%, compared to 6.03% at a similar auction in May.

COMPANIES

The weakest sector on the Stoxx 600 was banks, unsurprisingly, in the wake of the revelation that Barclays had been manipulating the London Interbank Offer Rate.

The British bank’s shares dropped over 15%, Commerzbank (-7.5%) and Deutsche Bank (-4.5%) followed Barclays downwards.

In Italy, the country’s biggest bank Unicredit was the leading riser, up 3.8%, as the market wondered whether Europe’s political elite may actually produce some solutions to the debt crisis.

Ageas, the Belgian insurance firm that was spun out of the defunct bank Fortis, rose 9% after revealing it will receive €400m from ABN Amro in a legal dispute.

OTHER MARKETS

By 17:03 in London the euro had fallen 0.3% against the dollar to stand at $1.2432.

BS

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