European Equities Head South Over Italian Austerity

European stocks declined, reversing earlier gains, as an opinion poll in Italy showed the anti- austerity campaign of Silvio Berlusconi has boosted the former premier’s popularity before this month’s elections.

UniCredit SpA and Intesa Sanpaolo SpA led a drop in Italian shares. Vinci SA, Europe’s biggest builder, slid 4 percent after posting a decline in 2012 profitability. ArcelorMittal climbed 1.7 percent. Volvo AB jumped 3.8 percent even after fourth- quarter profit fell as the company predicted its North American and European markets will improve this year.

The Stoxx 600 fell 0.7 percent to 283.46 at 2:36 p.m. in London, after earlier rising as much as 0.4 percent. The equity benchmark has still gained 1.4 percent this year as U.S. lawmakers agreed on a budget deal and data signaled the world’s largest economy is recovering.

“Why is Berlusconi gaining in the polls? It is because he has a populist campaign that goes completely against” Prime Minister Mario Monti’s policies, said Jacques Porta, who helps manage $627 million at Ofi Patrimoine in Paris. “It’s a very, very negative signal vis-a-vis Germany. It’s legitimate to see the market falling.”

Berlusconi narrowed the lead of front-runner Pier Luigi Bersani to 0.3 percentage points, the poll by Tecne institute for SkyTG24 showed. That is lower than the survey’s margin of error of 4 percentage points.

Berlusconi has gained in popularity before the Feb. 24-25 elections as he promised to cut taxes and end a levy on first homes implemented by Monti’s government. Monti has accused Berlusconi of trying to buy votes.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell