European shares close slightly lower despite commodity bounce; central bank meetings loom

Key Points
  • The U.K.'s FTSE 100 rose 0.8 percent by the close, boosted by a drop in sterling and an uptick in mining stocks
  • France's CAC 40 and Germany's DAX ended in the red, off 0.23 and 0.23 percent respectively
  • Expectations are that the Fed will raise rates one last time this year

European markets finished on a mixed note Monday as investors looked ahead to two key monetary policy meetings scheduled for this week.

After fluctuating between gains and losses, the pan-European STOXX 600 closed just below the flatline, off 0.05 percent provisionally. Most sectors closed lower; however, commodity-based sectors, media and banks outperformed.

Looking to bourses, the U.K.'s FTSE 100 rose 0.8 percent by the close, while France's CAC 40 and Germany's DAX ended in the red, off 0.23 and 0.23 percent respectively. The FTSE was boosted by a dip in sterling and a boost in mining stocks.

Banks were one of the sectors that finished on a positive note, with Britain's HSBC closing up 2.5 percent. Shares of the lender were lifted following news that the U.S. Department of Justice would seek dismissal of charges brought against it in 2012. "The Department of Justice has recognized HSBC's progress in strengthening its anti-money laundering and sanctions compliance capabilities over the past five years," HSBC said in a statement.

Overall, the gains in the banking sector were supported somewhat by expectations of higher interest rates. The U.S. Federal Reserve is due to start a two-day meeting Tuesday and the European Central Bank (ECB) is due to meet on Thursday. Expectations are that the Fed will raise rates one last time this year. Meanwhile, even though it's unlikely that the ECB will alter its policy this week, it's expected to announce new economic forecasts for the region.

Looking to commodities, basic resources rose 1.18 percent, surpassing fellow sectors after news surfaced that Australia's Mineral Resources made a bid for AWE, topping a Chinese offer. Metal prices on the London Metal Exchange were trading mostly higher in Monday's session, with nickel and lead posting strong gains.

Meanwhile, oil and gas stocks rose on the back of an uptick in crude prices. Brent crude posted gains of around 1.5 percent by Europe's close. Technology, travel and leisure, and utilities were the worst performing sectors Monday.

Looking at individual stocks, Steinhoff shares jumped 24.36 percent after three sessions in the red, due to an accounting scandal. Investec said Monday that although it has credit exposure to the South African retailer, it doesn't expect any losses from the accounting scandal.

The CEO of Mediaset, Pier Silvio Berlusconi told news firm Corriere della Sera over the weekend that he hoped the shared interest over TV content with Telecom Italia could lead to a truce with rival firm Vivendi; Reuters reported. On Monday, Vivendi popped 2.7 percent.

Inmarsat meantime tumbled over 8 percent after Goldman Sachs downgraded its rating on the stock to "neutral" from "buy".

Looking overseas, U.S. equities posted minor gains around Europe's close. In morning trade, investors were keeping a close eye on the news, after an explosion near New York City's Times Square on Monday.

A senior New York City Police Department official said that one person was placed in custody following the incident. Police added that the person in custody had sustained a minor injury. The suspect, was identified as Akayed Ullah, with the NYPD confirming that it is believed a crude bomb was detonated in Port Authority. He and three others suffered injuries that are not life threatening, the NYPD said.