Europe midday: Shares slip into red on French political risk

17th Jun 2024 11:28

(Sharecast News) - European shares slipped into the red on Monday as investors digested mixed economic data from China, a $4.7bn bid for Topdanmark from Finnish insurer Sampo and the start of the French national election campaign.

The pan-regional Stoxx 600 index reversed morning gains to be down 0.18% at 510.24. France's CAC 40 pared gains, but was still in the green, up 0.18% to 7,517 as campaigning began in the national election called at short notice by President Emmanuel Macron in response to the rise of far-right parties in recent European Parliament elections.

In China, May industrial output came in lower than expected, while the country's troubled property sector showed no signs of rebounding. Retail sales beat forecasts thanks to a holiday boost.

"Early gains are fading in Europe, with French political uncertainty adding to a somewhat shaky environment for stocks globally," said Scope Markets analyst Joshua Mahony.

"President Macron's decision to call parliamentary election represents a roll of the dice amid a groundswell of support for the far-right National Rally party, but markets are increasingly having to weigh up the potential consequences should it backfire."

"With the CAC having lost 6% over the course of last week alone, traders will remain split between those spotting an opportunity to buy the dip, and those aware of the risk posed to French stocks should support for Macron wane further. With the initial pop already starting to fade, it is worthwhile noting that any gains seen in French stocks will likely remain under the microscope for as long as this political uncertainty remains."

In equity news, Sampo, which already owns 48.5% of the Danish insurer, said its offer represented a 27% premium per Topdanmark share based on Friday's closing price, the companies said in a joint statement. Sampo shares were down 2.55% on the news, while Topdamark surged more than a fifth.

"By combining the businesses in a fully integrated Nordic operating platform, we can unlock growth and attractive synergies that will strengthen our position as a leading Danish P&C insurer," said Sampo chief executive Torbjorn Magnusson.

Shares in Carl Zeiss Meditec slumped as the German Medical company issued a profits warning.

Reporting by Frank Prenesti for Sharecast.com