Europe ends lower as caution reigns post-Brexit

European markets ended lower on Monday, as concerns about the U.K.'s Brexit vote returned to weigh on investor sentiment.

The pan-European STOXX 600 finished 0.7 percent lower provisionally, with sectors closing mostly in the red.

All major European bourses closed lower. The U.K.'s benchmark FTSE 100 was off 0.8 percent and the domestically-focused FTSE 250 index tumbled 2.1 percent. France's CAC slipped 0.9 percent, while Germany's DAX fell 0.7 percent.


In U.K. news, Chancellor George Osborne plans to cut corporation tax to below 15 percent in an attempt to offset the shock to investors from the Brexit vote, the Financial Times reported on Sunday.

In addition, Nigel Farage, leader of the U.K. Independence party, announced he was standing down, saying his "political ambition" had been achieved when the U.K. voted to leave the EU.

Referendum uncertainty knocked Markit's construction Purchasing Managers' Index (PMI) for the U.K. to 46.0 in June, the lowest level in seven years. The data sent U.K. property stocks to the bottom of the STOXX 600, with Persimmon, Land Securities, Taylor Wimpey and British Land, all closing off more than 5.5 percent.

Banks struggle

European banking stocks were major movers on Monday, with the sector closing 1.6 percent lower, weighed down by Italian lenders.

This came after media reports that Italian Prime Minister Matteo Renzi could be heading for a showdown with Brussels over a fallback plan to rescue ailing banks with public funds.

Banco Popolare, Banca Popolare dell'Emilia Romagna and UniCredit all closed more than 3.5 percent down subsequently, while BMPS slumped 14 percent after the European Central Bank said it must cut bad loans by 30 percent over the next three years.

In other news, London Stock Exchange (LSE) shareholders voted in favor of merging with Deutsche Boerse on Monday. The deal is expected to complete in the first quarter of 2017. Shares of both LSE and Deutsche Boerse closed more than 1 percent down on Monday.

Europe's best-performing stock sector was basic resources, boosted by the sharp price rise in silver, which crossed $21 for the first time in two years on Monday. The move helped precious metal miners Fresnillo and Randgold Resources rally, closing up around 7.7 and 4.4 percent respectively. Glencore, Antofagasta and ArcelorMittal also closed sharply higher.

Auto stocks underperformed, ending 2 percent down, after Kepler Cheuvreux cut its price target on a host of European automakers. Valeo, Peugeot Citroen, Renault, Porsche and BMW received price cuts and ended trade 1.5 percent lower or more.

Shares of Volkswagen closed 2 percent down after the company's chief executive rejected compensation calls for European customers in the wake of the emissions scandal.

In Asia stock markets closed higher overnight. The Australian federal election over the weekend failed to produce a clear winner or outright majority, raising the prospect of prolonged political uncertainty.

Wall Street was closed on Monday for the U.S.'s Independence Day holiday.

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