Europe: Stocks off two-week highs as energy stocks weigh

EUROPE’S main stock index slipped back from a two-week high as gains were limited by a slump in energy stocks, while market sentiment remained optimistic following the nomination of the new US Treasury Secretary and encouraging remarks from the ECB’s chief economist regarding monetary policy easing.

The pan-European Stoxx 600 edged up 0.1 per cent at 509.18 points. It hit a two-week high earlier in the session and logged three consecutive sessions of gains.

Energy stocks dropped 1 per cent and were the biggest drag on the index, as oil prices fell by 2.7 per cent on reports that Israel and Lebanon had agreed to the terms of a deal to end the Israel-Hezbollah conflict.

Sector-wise, defence stocks declined the most with a 1.5 per cent drop.

Italian bank UniCredit dropped 4.7 per cent after launching a surprise all-share offer worth 10 billion euros (S$14 billion) for smaller domestic rival Banco BPM, which climbed 5.5 per cent.

Shares of Commerzbank fell 5 per cent, as investors assessed the impact of Unicredit’s Banco BPM deal on the German lender’s likely buyout offer.

UniCredit CEO Andrea Orcel said any Commerzbank bid would come after the Banco BPM deal.

Meanwhile, luxury stocks were one of the biggest boost to the Stoxx 600, gaining more than 1.5 per cent. It lost 5 per cent in the past four weeks.

In a boost for global sentiment, Wall Street futures rose alongside a decline in US Treasury yields, following Trump’s selection of fund manager Scott Bessent as Treasury secretary. Bessent is expected to manage US debt while also focusing on enacting trade tariffs.

“If the primary focus of the new administration is boosting growth, there’s every chance that this can be very positive for the US, with spillovers elsewhere across the globe,” Deutsche Bank analysts said.

Against a backdrop of cautious optimism, attention turned to upcoming European data expected this week, which could provide insight into the euro zone’s economic direction. Preliminary inflation figures from Germany, the bloc’s largest economy, are scheduled for release on Thursday.

German business morale fell more than expected in November, adding to the negative outlook for a country poised to be the worst G7 performer this year.

European Central Bank’s chief economist Phillip Lane said the bank’s policy should not remain restrictive for too long, while also praising the gradual approach to cutting interest rates.

Expectations for a 50-basis-point rate cut by the ECB at its Dec 12 meeting have risen sharply, with market participants now anticipating more than a 50 per cent likelihood of this action.

Tomra Systems jumped 10.7 per cent, with analysts citing Spain’s plans to introduce a deposit return scheme within two years, boosting the prospects for the Norwegian sustainable technology company’s machine sales in key markets.

ITV climbed 8.6 per cent following media reports that the British broadcaster could be a takeover target for a team led by CVC Capital Partners.

On the flip side, home improvement retailer Kingfisher slumped 13.2 per cent after lowering the top-end of its annual profit outlook, dragging the retail sector. REUTERS