Euro Stocks Head for another Whirlwind Week
Volatility will continue to be the name of the game in European stock markets next week, as jittery investors fear more surprises from the banking sector, analysts said on Friday.
Last week, market participants endured a roller-coaster ride of uncertainty as banks such as Societe Generale, Barclays and Lloyds TSB revealed their bad bets on subprime-backed investments, causing writedowns to rise.
But in some cases fear turned into relief that things weren't worse and investors scooped up the battered shares.
"I definitely think we are going to see the same kind of volatility that we saw last week," Thomas Bobeck, head of equity strategy at Erste Sparinvest, told CNBC.com.
Royal Bank of Scotland, HBOS and Erste Bank are all due to report earnings as the week progresses, with many market watchers hoping for evidence the current market turmoil is subsiding.
"It's a little bit too early to buy aggressively into the banking sector," Bobeck warned investors, despite bargain-basement prices for the once valued assets.
The price of RBS shares has fallen well over a third since the start of August, while the overall EuroStoxx Banking Index has lost a quarter of its value in the same period.
Other earnings are due from German auto-maker Daimler, pharmaceuticals giant Bayer and UK insurer Aviva.
Some analysts consider the real economy, outside of financial stocks, to be holding up well, but deterioration in other sectors' earnings could mean that the trouble is spreading.
German business will get its monthly health check from the IFO Institute's survey Tuesday and the UK's gross domestic product figure will be released Wednesday.
Uncertainty in financial stocks has benefited commodities, as the price of oil breached $100 a barrel for two days running, while gold and platinum hovered around record highs.
And commodities prices are set to rise further, Rob-Roy Roedel, CEO of Plenum Investments, told "Worldwide Exchange," as "there's just not enough supply out there and demand is rising."