- STOXX 600 up 0.1 pct
- Italian stocks lead losses on spending concerns, hawkish ECB
- RPC drops after full-year results, looks to sell non-core assets
European stocks edged higher on Wednesday, underpinned by gains in tech and commodity-related stocks, although trading was cautious amid worries over Italian spending plans and global trade.
The pan-European STOXX 600 index was up 0.1 percent by 0911 GMT, while Germany’s DAX advanced 0.4 percent.
Trading was choppy, with European stocks dipping briefly into negative territory, as investors mulled the implications of the new Italian coalition government’s big spending plans following Tuesday’s comments from the new Prime Minister Giuseppe Conte promising radical change.
Italian stocks were notable underperformers on the day, down 0.8 percent and extending their slide from the previous session.
“Even under very favorable assumptions the fiscal picture is likely to worsen substantially,” economists at UBS said in a note.
Likewise upbeat comments from the ECB’s chief economist ahead of next week’s central bank meeting also weighed on Italian assets.
Italian banks were among the biggest STOXX fallers, with shares in Intesa Sanpaolo, UniCredit and UBI Banca down 2.6 to 3.1 percent.
Banking stocks were also lower, last down 0.4 percent. The sector came under pressure last week as Italy struggled to form a government.
Analysts at Credit Suisse Wealth Management said that they preferred U.S. financial stocks over those in the European Union.
“EU financial stocks may face some headwinds if Italian government bond volatility persists,” Credit Suisse WM’s analysts added.
A recent rally in tech stocks and gains for basic resources and energy stocks stemmed losses, however, as investors have shifted their focus from concerns over trade tariffs and Italian politics and back to the supportive backdrop of global growth for equities, which lifted shares in cyclical sectors.
Tech stocks reached another 17-year high, up 0.7 percent, joining in a global rally which saw the U.S. Nasdaq index end at a record close.
Among individual stocks, RPC was the biggest faller, tumbling more than 15 percent after the plastic packaging leader said it was looking to sell assets.
Also in the packaging sector, shares in Smurfit Kappa recovered some of yesterday’s losses, up 3.2 percent, after International Paper confirmed that it will not make a bid for the Irish company.