Europe ends on a positive note as Italy, Brexit concerns ease; RPC Group spikes 18%

Key Points
  • The pan-Europe STOXX 600 rose 0.47 percent by the close, with almost all sectors ending in positive territory.
  • Italian ministers said the country would stick to EU rules in its upcoming budget.
  • EU Brexit negotiator Michel Barnier said it was "realistic" to expect a deal within six to eight weeks.

European stocks finished Monday's session in the black, as investors shook off concerns surrounding global trade.

The pan-Europe STOXX 600 rose 0.47 percent by the close, with almost all sectors ending in positive territory.

Looking at major bourses, the U.K.'s FTSE 100 saw minor gains by the close, up 0.02 percent, while France's CAC 40 and Germany's DAX extended gains, closing up 0.33 and 0.22 percent respectively. In peripheral markets, Italy's FTSE MIB skyrocketed 2.3 percent on the back of a strong performance seen in the country's banking sphere.

Banking stocks were among the biggest gainers Monday. In particular, investors flocked into Italian banks, given reassurances from the government that the 2019 deficit will not disrespect European fiscal rules. Intesa Sanpaolo, UniCredit and Banco BPM all finished the session up 4.5 percent or more.

Meantime, utilities was Europe's top performing sector, closing up 1.56 percent, as almost all of its stocks ended the day in positive territory.

Looking at individual stocks, RPC soared 18 percent, making it the top gainer on the STOXX 600, after reporting that it is in early discussions with U.S. asset management giant Apollo Global Management for a potential takeover.

A number of stocks fell to the bottom of the STOXX 600, including Ryanair, Glencore and Danske Bank, which all dropped more than 1.5 percent, following broker updates.

In corporate news, U.K. retailer Debenhams moved to reassure investors on Monday with a statement saying its annual profit would meet forecasts as shares in the London-listed small-cap plummeted more than 10 percent. The firm hired auditor KPMG to assist with the improvement of its financial performance.

Italy, Brexit

On Wall Street, stocks were mostly higher by Europe's close, with shares of tech companies rebounding from sharp losses last week.

Global markets continue to monitor trade concerns after President Donald Trump said Friday that there could be an additional $267 billion in tariffs against China. The administration is also finalizing plans to impose tariffs of up to 25 percent on $200 billion of Chinese goods. Trump also suggested that Apple should move its production to the U.S. to avoid being caught up in the tariffs against China.

But market sentiment was lifted by reassurances from Italian ministers that the government will respect European Union fiscal rules with regard to its upcoming budget, as well as hopes of a Brexit deal being reached within weeks.

Italy's Deputy Prime Minister Matteo Salvini said on Saturday that the country "will respect EU budget rules." Meanwhile, Finance Minister Giovanni Tria said Italian bond yields would fall as the government implements its economic policies.

Italy remains vulnerable to external shocks, former IMF director says

And the EU's chief Brexit negotiator, Michel Barnier, said Monday that he thought it was "realistic" to expect a deal to be reached within six to eight weeks.

"I think that if we are realistic we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within six or eight weeks," Barnier said at a conference in Slovenia. Sterling rallied on the back of Barnier's comments, rising 0.8 percent against the dollar and hitting a five-week high.

Investors are also digesting news out of Sweden, where a general election has led to a political deadlock. The two main political blocs almost tied with a margin of 0.3 percent separating them. More importantly, the nationalist Sweden Democrats (SD) saw a surge in support from a previous election, gathering 18 percent of the votes and placing third in the overall result.

In terms of data, balance of trade numbers out in the U.K. showed the trade deficit with the EU at its smallest level since April 2016. Other data also showed the British economy grew at its fastest pace in nearly a year in the second-quarter, supported by the World Cup and warm weather.