Shares Close Lower as Hurricane Disrupts Markets
European shares closed lower on Monday as Hurricane Sandy forced major U.S. markets to stay closed.
The FTSEurofirst 300 Index provisionally closed down 0.4 percent at 1,093.46 points.
The East Coast of the U.S. was on high alert on Monday, bracing itself for what could be the worst hurricane ever to hit the country. The National Weather Service predicted that the highest storm surges ever, of 6-to-11 feet, could hit U.S. cities by Tuesday evening.
The NYSE Euronext, NASDAQ OMX and CME group exchanges announced they would be closed on Monday. Trading on Tuesday is yet to be confirmed and Wall Street banks are making contingency plans ahead of the hurricane's arrival, allowing staff to work from home or moving operations to other cities temporarily.
The European insurance sector was trading lower on Monday with stocks such as Swiss Re, Munich Re and Hannover Re all in the red on worries about insurance claims from the storm.
Mike McCudden, head of derivatives at Interactive Investor believes the hurricane looks set to dominate the news agenda.
"Equity markets have started the week on the back foot, with some traders no doubt taken aback by the late decision to suspend electronic trading across a number of US exchanges in preparation for hurricane Sandy's arrival," he said in a morning note.
"Perhaps it's no surprise that insurers Aviva, Old Mutual, Prudential and Legal & General are some of the biggest losers on the day so far."
In Europe, EU governments started discussions this week to cut 50 billion euros ($64.6 billion) off the existing EU long-term budget of 1 trillion euros. Germany, France and Britain are calling for even steeper cuts, according to Reuters.
Reuters also reported on Monday that Greece's foreign lenders had refused to make any further concessions on changes to labor laws which had been contested by the small Democratic Left Party in the country, thus prolonging any agreement on the crucial EU/IMF austerity package.
ECB policymaker Ewald Nowotny was also vocal about Greece on Monday, saying that the European Central Bank could not participate in a public sector writedown of Greek debt as this would amount to indirect state financing. The Athens stock exchange was the biggest loser in Europe; falling by over 3 percent.
The Italian FTSE MIB Index was down 1.48 percent on Monday after former president Silvio Berlusconi threatened to withdraw support for the government of Mario Monti on Saturday with economists questioning whether he could destabilize the country's economic reforms.
In stocks news, Pearson (who own Penguin) and publishers Random House, owned by German media giant Bertelsmann greed on Monday to combine their businesses.
Reports surfaced on Monday that Swiss bank UBS were set to announce 10,000 job cuts worldwide; the bank's shares rose sharply.
Telecom Italia reported on Monday that its nine-month net loss had more than trebled to reach 53.8 million euros ($69.6 million), dragged down by higher programming costs at its flagship La7 channel. Shares in the company fell on the news.
TNT Express also posted weak results on Monday, with third-quarter profita down 12 percent. The Dutch mail delivery group repeated that it is expecting European Commission approval for its purchase by UPS .
Citigroup cut its outlook for Hargreaves Lansdown to "sell" from "neutral" on Monday; shares were down 3.82 percent.