Europe close: Spanish and Italian stocks take a beating
By Alexander Bueso
Date: Friday 25 May 2018
(Sharecast News) - North Korea's diplomatic response to the US decision to pull-out of a planned 12 June summit buoyed markets, helping to offset political tensions in the euro area periphery, particularly in Spain.
Also delivering a boost to investor sentiment was a slightly better-than-expected reading on German business confidence for the month of May.
Against that backdrop, by the close of trading the benchmark Stoxx 600 had edged up 0.14% or 0.54 points to 22,398.15, alongside a jump of 0.65% or 82.92 points to 12,938.01 for the German Dax, while the Cac-40 was off by 0.11% or 5.90 points to 5,542.55.
Despite Friday's gains in some indices, overall stocks on the Continent were headed for their first weekly loss in two months.
That was underscored by sharp falls in Spanish and Italian shares on Friday, with Madrid's Ibex 35 retreating 1.70% to 9,826.50, while the FTSE Mibtel ended 1.54% lower at 22,398.15.
Following an embarrassing legal sentence overnight for Spain's ruling PP party, linked to two of its mayors and its ex-treasurer, most of the main opposition parties are now calling for either the Prime Minister's impeachment or for early elections.
While not yet certain, the odds of the latter appeared to have risen substantially.
Meanwhile, Italian shares were still on the back foot as investors continued to shy away from the country's sovereign debt.
The euro/dollar also traded lower, falling 0.5% o 1.16612.
Longer-term Spanish bonds were also under heaving selling pressure, pushing the yield on 10-year notes up by seven basis points to 1.47%.
On a more positive note, the closely-followed IFO German business confidence index printed at 102.2 for May and was unchanged from the month before (consensus: 102.0).
Nevertheless, economists were wary of calling a bottom, given the ongoing protectionist trade winds that were blowing.
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