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European Shares Steady, Italy Underperforms

European equities finished a volatile session broadly flat on Monday after investors balanced fresh assurances of global central bank stimulus against some disappointing earnings and political uncertainty in Italy.

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
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DAX
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CAC 40
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IBEX 35
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The pan-European FTSEurofirst 300 index provisionally closed up 0.1 percent at 1,169.30 points, recovering some poise in afternoon trade after Janet Yellen became the latest U.S. Federal Reserve official to reaffirm a commitment to keeping easy monetary policy for some time yet.

Italy's FTSE MIB, however, was a clear laggard, posting a near-three month intra-day low and finishing 0.9 percent lower on signs the country could be edging towards another election within months after polls ended in a stalemate last week.

"Short term, the uncertainty is dominating the equity market in the sense that it puts upward pressure on the equity risk premium required by investors. This period of heightened uncertainty will most likely persist for some time," said Tammo Greetfeld, equity strategist at UniCredit.

"The Spanish and Italian equity markets are most at risk from price setbacks, and investments should be focused on the German equity market, as this market offers the best chance of continuing the positive development of the last several months."

Europe's biggest bank, HSBC, posted a pre-tax profit of $20.65 billion for 2012, much lower than the $22.7 billion forecast by analysts in a Reuters poll. Shares in the U.K. bank dropped 2.7 percent after the earnings were released on Monday and the European banking sector was pressured downwards.