European Stocks End Mixed, Banking Sector Rebounds
European stocks closed mixed on Monday in thin trading because of a national holiday in the U.S. and on anticipation of a busy week.
Caution also seemed to be the word for Asian markets, which shrugged off a rally in the U.S. markets on Friday after speeches by Federal Reserve Chairman Ben Bernanke and President George Bush reassured jittery investors.
The London FTSE-100 and Frankfurt DAX edged shyly into the green, while the Paris CAC-40 was slightly lower. The FTSE CNBC Global 300 was flat.
The utilities sector was down, despite the fact that Gaz de France and Suezreceived approval from their board members to create Europe's third-largest power company after 18 months of political wrangling.
The "merger of equals" sees Suez spinning off 65% of its water and waste division, following the recommendations of French Prime Minister Nicolas Sarkozy, to create the national energy giant. Shares of Gaz de France fell 2.7%, while Suez fell 3.3%.
Traders said the shares in both companies fell on profit-taking, once the deal was agreed, but some analysts said the terms of the spin-off of Suez's environmental unit were still not clear, and this was affecting the shares.
"The problem has been isolated and kicked to one side but not fully solved," Oliver Adelman from MergerMarket told "European Closing Bell."
The banking sector rebounded on a wave of good news.
Barclays Chairman Bob Diamond told the Sunday Times that he expected losses from exposure to structured investment vehicles not to exceed 75 million pounds ($150 million), sending the bank's shares up more than 4%.
Also on the mergers and acquisitions front, Europe's largest bank HSBC said it would buy Korea Exchange Bank for $6.3 billion. HSBC shares rose 0.2% in London.
In Germany, Commerzbank, Deutsche Bank and Deutsche Postbank shares were up, paring last week's losses.
The Qatari Investment Authority also upped its offensive for the London Stock Exchange by indicating it was willing to pay as much as 15 pounds ($30 dollars) a share for Nasdaq's 31% stake in the exchange, the Sunday Times newspaper said. LSE shares gained 0.6%.
Trading volumes are set to raise on Tuesday with the return of the U.S. investors from holiday and analysts expect some volatility before the European Central Bank's governing council meeting on Thursday.
Most investors expect the ECB, which had previously signalled a rate rise was in the cards for September, to hold its key monetary policy rate unchanged because of the recent turmoil in financial markets.