European stocks closed Monday with gains after China’s central bank launched another stimulus effort, but nonetheless locked in their third straight monthly decline.
The Stoxx Europe 600 SXXP, +0.72% rose 0.7% to end at 333.92 after falling out of the gate when a Group of 20 (G-20) statement lacked the punch to satisfy a market that may want aggressive action to revive global growth.
The index pared its loss during morning trade after the People’s Bank of China cut the level of reserves that banks are required to hold by 0.5%. The move is aimed at bolstering credit growth to support the world’s second-largest economy.
The “surprise bout of monetary stimulus from China” helped erase early losses, said Jasper Lawler, analyst at CMC Markets, in a note. But the move up was somewhat muted, he said.
“Markets began the week in a state of disappointment after the meeting of G-20 finance ministers failed to produce any tangible plan to address slowing global growth,” Lawler added.
The Stoxx Europe 600 had been down by more than 1% after a statement from financial officials from G-20 economies issued Saturday said “excess volatility and disorderly movements in exchange rates” are a risk for economies and financial stability. The G-20 officials also reaffirmed they would “refrain from competitive devaluations” of their exchange rates.
European financial stocks initially struggled, with bank shares in the red. Asia-focused Standard Chartered PLC STAN, +0.10% dropped more than 4% “as fears increase that its credit rating could be slashed by S&P,” said Brenda Kelly, head analyst at London Capital Group, in a note. “Already on credit watch, there is increasing uncertainty surrounding banks especially those with Asian exposure and the ability to recover profitability is in doubt in the near term.”
But Standard shares managed to bounce back, finishing up 0.1%. Shares in HSBC PLC HSBA, -1.65% closed down 1.7% while embattled Italian lender Banca Monte dei Paschi di Siena SpA BMPS, -4.41% slumped 4.4%.
Data: A weak inflation reading from the eurozone Monday appeared to strengthen the view that the European Central Bank will ramp up its own stimulus efforts their March 10 meeting. Eurostat, in an initial estimate, said euro area inflation fell to minus 0.2% in February compared with a 0.3% rise in January. Analysts polled by FactSet had expected a February reading of minus 0.1%.
The euro EURUSD, -0.4848% edged down to $1.0902 after the report’s release, compared with around $1.0917 ahead of the data. The shared currency, which late Friday fetched $1.1039, recently traded at $1.0865.
Indexes: Germany’s DAX 30 DAX, -0.19% gave up 0.2% to end at 9,495.40, but France’s CAC 40 PX1, +0.90% moved 0.9% higher to 4,353.55.
The U.K.’s FTSE 100 UKX, +0.02% moved up less than 0.1% to finish at 6,097.09.
Source: MarketWatch
