European stocks closed softer on weak economic data but off their lows, while Wall Street was steady and investors tried to see the bright side of recent stress tests for banks.
London slid 0.5% after a survey showed Britain’s manufacturing industry has slumped to its lowest level in more than three years on the back of Brexit.
In the eurozone, Paris stocks retreated 0.7% and Frankfurt 0.1% after weak manufacturing figures for the area.
The Milan stock market index ended the day 1.7% lower, dragged down by financials.
Italian banks performed worst in last week’s assessment by the European Banking Authority’s probe of lender resilience, but overall the sector came out reasonably well, analysts said.
“The latest EU bank stress tests confirm that, on the whole, the region’s banks are in a much healthier position than a few years ago,” Capital Economics noted.
“However, there are still significant problems in some countries’ banking sectors, most notably Italy’s. These issues will not be resolved quickly, so several banks will remain vulnerable to more severe losses of investor and depositor confidence than seen this year,” it said.
“The results of the European banking stress tests last Friday have helped confirm what was already known: the Italian banking sector is one of the key problems facing the eurozone as a whole,” Spreadex analyst Connor Campbell told AFP.
Shares in the eurozone’s problem child bank, Monte dei Paschi, were saved from losses by news of a private rescue deal for the bank, closing 0.6% higher at 0.31 euros.
But UniCredit shares fell sharply, even triggering a temporary suspension, before closing 9.4% down at 1.986 euros.
Banco Popolare di Milano and Ubi Banca each shed over 6%.
Meanwhile, weak British and European manufacturing data also weighed on sentiment.
The data prompted new concern over economic fallout from Britain’s shock vote to leave the European Union.
“It appears post-Brexit fears amongst manufacturers were not just a flash in the pan,” said CMC markets analyst Jasper Lawler.
“Worryingly, two-speed Europe is emerging again with most of the gains in output and employment coming from Germany,” he said.
In Amsterdam, Heineken fell 3.7% to €81.33 on the Amsterdam exchange after the brewing giant reported a 48.8% drop in half year net profits, warning of “a challenging economic backdrop”.
US stocks were steady as they geared up for a week of key corporate earnings and economic data culminating with the July jobs report.